When weighing options for going public, savvy entrepreneurs sometimes consider using the Direct Listing method instead of opting for a traditional IPO. While the gutsy move is alluring and has its advantages, it is often abandoned by those who were initially tempted by its charms. Those who use this method often find that it results in a significant loss in share value from the reference price in the offering, Weaver & Tidwell report.
Few companies have been able to overcome what’s needed to have a successful direct listing. While some of the challenges are practical in nature, the bulk of them hinge on the ability to transcend a buyer’s perception enough to sustain a strong opening day and the ongoing lure of them cashing out as their attention wanes.
There have been two direct listings this year on U.S. exchanges and only one in 2022. Read more.
