Direct Listing
An alternative to a traditional IPO where a company lists its shares on an exchange without raising new capital. The conversation mentions evolving this to include a capital raise.
First Mentioned
9/9/2025, 6:17:34 AM
Last Updated
9/9/2025, 6:19:22 AM
Research Retrieved
9/9/2025, 6:19:22 AM
Summary
A direct listing is an alternative method for private companies to become publicly traded by listing existing shares on a stock exchange, such as Nasdaq or NYSE, without issuing new shares or raising additional capital. Unlike a traditional Initial Public Offering (IPO), direct listings bypass the need for underwriters, reducing costs and preventing shareholder dilution. This approach provides liquidity for existing shareholders, including founders, employees, and early investors, allowing them to sell their shares directly to the public, with the share price determined by market supply and demand. Prominent examples include Spotify. Nasdaq CEO Adena Friedman has advocated for direct listings as a way to modernize public markets and address the burdens of the IPO process, which have led companies like Uber, Stripe, and SpaceX to remain private longer, thus concentrating wealth in private markets.
Referenced in 1 Document
Research Data
Extracted Attributes
Cost
Generally cheaper than an IPO
Method Type
Alternative to Initial Public Offering (IPO)
Shares Listed
Existing shares (held by founders, employees, investors)
Share Dilution
Prevents dilution of existing shares
Capital Raising
Does not raise new capital
Primary Purpose
Allows a company to go public
Alternative Names
Direct Public Offering (DPO), Direct Placement, Direct Listing Process (DLP)
Liquidity Provided
For existing shareholders
Underwriters Required
No
Share Price Determination
Market supply and demand
Timeline
- Nasdaq CEO Adena Friedman discusses direct listings as an alternative avenue to public markets and a way to modernize capital markets during the All-In Summit. (Source: Document 62f8fba1-68c4-4309-b35b-c4ac90d7a681)
2025
Web Search Results
- Comparing Direct Listing vs. IPO - Carta
A direct listing is a process for a private company to become publicly traded by listing its existing shares on a stock exchange without using intermediaries like underwriters or investment banks. Unlike a traditional initial public offering (IPO) where new shares are issued to raise capital, a direct listing allows existing shareholders—including founders, employees, and investors—to sell their outstanding shares directly to the public up to the initial day of trading on a public exchange like [...] Learn /Startups /Exit Strategies /IPO /Direct Listings # Direct listings Author: Katie Miserany | Read time: 2 minutes Published date: April 1, 2025 Direct listings offer companies a way to provide liquidity to shareholders without diluting shares or spending a ton of money on underwriters. Learn more about direct listings vs. IPOs when going public. Share on Twitter Share on Linkedin Share by Email Contents Direct listings What is a direct listing? Direct listing vs IPO [...] Direct listings are often chosen by companies that do not need to raise additional capital but want to provide liquidity to their existing shareholders or achieve public visibility. By avoiding the issuance of new shares, these companies prevent ownership dilution, ensuring that existing shareholders retain their proportional stake.
- Direct Listings vs. IPOs: How Are They Different?
A direct listing is one method by which a company can list shares of stock on a public exchange such as the New York Stock Exchange (NYSE) or Nasdaq directly, without using underwriters to create new shares, as you might with an IPO. [...] When you hear of a company “going public,” one route is via an initial public offering, or IPO — but a company can also go public through a direct listing, where no new shares are created and underwriters are not required. Direct listings, also known as the direct listing process (DLP), direct placement, or direct public offering (DPO), are a way for companies to raise capital by selling existing shares without the complexity of engaging investment banks and other intermediaries. [...] Direct listings are an appealing alternative to IPOs for private companies who want to go public, thanks in part to lower costs and reduced regulations. A direct listing may also be appealing to retail investors who want to purchase shares from companies that are going public.
- Direct Listing - Overview, Pros/Cons, Why Choose
A direct listing is a process for a company to become public without going through the initial public offering process. The process makes existing stock owned by employees and/or investors available for the public to buy and does not require underwriters or a lock-up period. Direct listing increases liquidity for existing shareholders and is usually cheaper than an IPO. ### Direct Listing vs. Initial Public Offerings (IPO) [...] A direct listing is a process by which a company can go public by selling existing shares instead of offering new ones. Companies that choose to go public using the direct listing method usually have different goals than those that use an initial public offering (IPO). ### Summary [...] Home › Resources › Equities › Direct Listing # Direct Listing The process by which a company can go public Written by CFI Team Read Time 4 minutes Over 2.8 million + professionals use CFI to learn accounting, financial analysis, modeling and more. Unlock the essentials of corporate finance with our free resources and get an exclusive sneak peek at the first module of each course. Start Free Start Free ## What is a Direct Listing?
- Direct Listing vs. IPO | Difference + Examples - Wall Street Prep
Direct Listing is the process by which a company goes public by getting listed on an exchange and offering existing shares directly to the open market. ## How Does a Direct Listing Work? The traditional initial public offering (IPO) model has been disrupted by the emergence of direct listings, in which a company starts selling shares directly to the public.
- IPO vs Direct Listing | DFIN
A direct listing allows a company to enter the public market by listing existing shares without issuing new ones. Unlike an IPO, there are no underwriters to set the initial share price or facilitate new capital raising. Instead, the market determines the share price based on supply and demand. Direct listings do not create or sell new shares, meaning no capital is raised through the listing itself. The company avoids hefty underwriter fees, leading to potential cost savings. Existing [...] The direct listing process is thorough. First, the company prepares financial statements and ensures compliance with public company requirements. Then, it submits a registration statement to the SEC for direct listings, detailing financial health and risk factors. Unlike an IPO, where banks allocate shares, direct listings allow shares to trade freely once listed. The share price is set by market supply and demand rather than pre-determined underwriting.