Glossary
Direct Listing
A path to public markets in which existing shares are listed without an underwritten offering.
A direct listing lists a company's existing shares on an exchange without raising new capital through an underwritten offering. There is no traditional roadshow or bookbuilding; the opening price is set by an opening cross that matches buy and sell orders at the listing exchange.
Direct listings became prominent with Spotify (2018) and Slack (2019). The SEC later approved a primary direct listing structure that allows the company to sell new shares as part of the opening cross.
The trade-off is straightforward: direct listings avoid underwriting fees and the IPO discount but offer less price certainty and less of the supportive marketing apparatus.