There’s a segment in the latest a16z podcast which gives a really good summary of why direct listings are appealing to companies, how they work and the New York Stock Exchange’s battle with the SEC to improve them.
To summarise, they say that the main benefit is that a direct listing enables better price discovery, which will help them avoid underpricing the shares at $10 and missing out on the money they could have earned when the shares pop to $30.
Obviously that means that investors will miss out on the pop too but a) retail investors generally can’t buy the shares immediately anyway and b) this may encourage more companies to go public sooner. So this could be good news.
a16z do have a vested interest in the companies that they’ve invested in doing direct listings so I wonder if they’re glossing over any potential downsides
They also have longer episode about direct listings here, which I haven’t had a chance to check out yet.