Spotify’s Direct Listing Highlights A Cost Effective Path To Public Markets Often Used By MicroCaps
Spotify’s Direct Listing Highlights A Cost Effective Path To Public Markets Often Used By MicroCaps
A recent post in Traders Magazine by Jason Paltrowitz (EVP of OTC Markets Group) discussed “Going Public in a Post-Spotify World.”
In April, music streaming giant Spotify directly listed on the NYSE without a traditional IPO. Direct listing (also known as a “Slow-PO”) is a cost effective way for companies to list their shares on a public market because there is no formal capital raise, road shows, or banker fees.
Slow-POs have been a popular method for microcap companies to go public on the OTC Markets for years.
“In fact direct-to-market “Slow POs” have been taking place for nearly a decade. In 2010, OTC Markets Group completed a “direct-to-market” with its own company stock. Shares of OTC Markets Group trade on the OTCQX market under the symbol OTCM.” Paltrowitz writes.
Direct listings on the OTC Markets has been popular among smaller companies, especially as the cost and size of IPOs has steadily increased.
Smaller companies can benefit greatly by accessing the capital markets but IPO costs and continued expense of being listed on a national exchange (like the Nasdaq or NYSE) has prohibited many from going public.
Direct listing on the OTC has long been a cost effective way for smaller companies to go public. Perhaps, Spotify’s slow-PO will help more business leaders get comfortable with the idea of a direct listing… what do you think? Tell us in the comments or on Twitter & LinkedIn.
Read Paltrowitz’s entire post HERE.