First Spotify changed the music industry. Now it might change the way we think about public offerings.
On Wednesday, February 28, 2018, Spotify filed its prospectus to go public through a direct listing on the New York Stock Exchange (NYSE). In a direct listing, a company puts its shares on a stock exchange without first raising additional funds or offering additional shares. In doing so, the company bypasses costs associated with an underwriter and avoids the formal roadshow, testing the water discussions, and other time-consuming and costly processes associated with traditional IPOs. It also does not have the traditional 180 day contractual lockup period customarily associated with an IPO. Companies must file a registration statement with the Securities and Exchange Commission (SEC) and are still subject to SEC reporting and compliance requirements after conducting a direct listing. (more…)