With the Lyft IPO being the first highly successful, multi-billion-dollar tech IPO to hit the public markets, excitement is building for the many other companies that have expressed an interest in going public. Slack Technologies Inc, a workplace-messaging company, has made the unorthodox choice to list not on the NASDAQ, which is the main exchange for tech companies but instead will go public on the New York Stock Exchange (NYSE). Additionally, the Slack has revealed that their IPO, which is planned to take place this summer, will be a direct listing.
As opposed to a regular IPO, companies that wish to directly list on public exchanges means that they won’t be raising any money or using underwriters. In this case, companies don’t choose the price or who gets to buy in the night before trading starts. While this is quite rare in today’s age as companies go public mainly to raise funds, but it’s something that slowly becoming more popular among cash-rich tech start-ups.
According to The Wall Street Journal, Slack will be following another company that’s already done a direct listing on the NYSE, Spotify Technology SA , whose market value now is at $25 billion. In comparison, Slack was last valued privately at being worth around $7 billion. Overall, the workplace-messaging company has over 10 million daily active users at 85,000 paid customers and has raised over $1 billion since it first launched in 2013. Back in August, Slack raised $427 million in funding led by Dragoneer Investment Group and General Atlantic, which was when Slack was privately evaluated.
Currently, the company is still in talks with the Securities and Exchange Commission (SEC) over the details of the listing, which isn’t expected to take place until June or July. The listing, while highly watched by traders and speculators looking to make money from the price volatility, means that Wall Street firms won’t be able to rake in profits from underwriting Slack’s IPO since it will be done through a direct listing.
Goldman Sachs, Morgan Stanley, and Allen & Co were the three investment banks advising Slack on the offering who also happened to be the banks that assisted Spotify on its own direct listing. This isn’t a coincidence as Slack hopes to achieve the same level of success Spotify has had by going public this way.
Slack is just one of many tech IPO’s coming up this year. Just recently, Lyft went public much to the acclaim of investors, although shares fell around 12 percent in a move that is worrying for some who thought the excitement would last well beyond these couple of days. Overall, share prices for the newly minted IPO have settled below their initial IPO price.
Other IPO’s that have caught the attention of Wall Street include Uber, Airbnb, and Palantir, with the former potentially being a candidate for one of the largest IPO’s in recent history. With some economists predicting that 2020 will bring an economic recession, some experts have gone on to expect that the 2019 IPO market will reach 200 billion collectively as companies rush to go public before a hypothetical downturn affects investor sentiment.