The ubiquitous corporate messaging service Slack is following in the footsteps of Spotify’s subscription music service and heading to the New York Stock Exchange for trading through a direct listing, according to the Wall Street Journal.
Slack, which reportedly had somewhere near $900 million on hand last October when it was prepping for its initial public offering, is likely choosing the direct listing route for some of the same reasons that Spotify had when it went public.
Here are the reasons we listed for Spotify’s decision last year around this time:
List Without Selling Shares– Spotify has plent of money with $1.3 billion in cash and securities, has no debt since it converted that into equity for investors, and has positive free cash flow
Liquidity – Investors and employees can sell on public market and sell at time of their choosing without investors shorting a lockup expiration, while new investors can join in
Equal Access– Bankers won’t get preferred access. Instead, the whole world will get access at the same time. “No underwriting syndicate, no limited float, no IPO allocations, no preferential treatment”.
Transparency – Spotify wants to show the facts about its business to everyone via today’s presentation, rather than giving more info to bankers in closed door meetings
Market-Driven Price Discovery – Rather than setting a specific price with bankers, Spotify will let the public decide what it’s worth. “We think the wisdom of crowds trumps expert intervention”.
Slack doesn’t need the money that could come from a public offering, but its longtime employees would like to see some liquidity, and so would its longtime investors.
Choosing the New York Stock Exchange likely gives the company some comfort, because unlike the Nasdaq, the NYSE has designated market makers on the floor of the exchange who can manage prices if the stock becomes really volatile in its first day of trading, according to the WSJ.
This year will be a banner year for public offerings in the U.S. and the NYSE and rival Nasdaq exchange are competing to see who can claim the most tech public offerings for the year.
Nasdaq struck an early blow with the Lyft public offering last week. But NYSE has claimed, Pinterest, Uber, and Slack which could be the biggest public offerings of the year.
Whatever the result, the public offering will be good news for investment firms like Accel, Andreessen Horowitz, Dragoneer Investments, General Atlantic, GV, Kleiner Perkins, Social Capital, Softbank Group, and Thrive Capital, which collectively invested roughly $1.2 billion into the company.