![]() ![]() WOODS: Direct listing, that means just allowing your existing private shares to be traded on the stock market. WOODS: So Barry tries to figure out a way to retain as much value as possible to Spotify.ĬAMPBELL: He starts talking to his lawyers and starts sounding people out about whether he could list Spotify right on the exchange without having to issue new shares. WOODS: Now, Barry doing this IPO in a new way wasn't purely motivated by altruistically wanting to reform the system.ĬAMPBELL: None of them want Spotify to issue new shares if it doesn't need to because that's just going to dilute their stake in Spotify and make them less wealthy. WOODS: Still, Barry thought it was worthwhile to do an IPO.ĬAMPBELL: So with that billion dollars in the bank, Spotify can and does start thinking about, like, how it can do a potential IPO on its own terms. And at first, Barry went out and raised funds privately from venture capital firms and private investors.ĬAMPBELL: And he had actually gone out to raise 500 million. WOODS: A few years later, Barry joined Spotify as its chief financial officer. One person closely watching LinkedIn's IPO was Barry McCarthy.ĬAMPBELL: Barry being sort of, you know, the no-nonsense financial markets expert just saw that as so inefficient. Its share price more than doubled on the first day, hundreds of millions of dollars the company missed out on. But the amount that share prices sometimes rise on the first day of an IPO goes way beyond that. Now, a little bit of a pop, like a slight rise in the share price on the day of the launch is widely seen as a good thing. ![]() So the people who run mutual funds or wealthy private investors, those people are the ones who will buy all the new shares, often with the intention of selling them again the next morning to the public at large at an almost guaranteed profit. WOODS: The investment banks in charge of the IPO will gather together big investors. Our colleague Darian Woods from The Indicator from Planet Money explains.ĭARIAN WOODS, BYLINE: Dakin Campbell is the chief financial correspondent for Business Insider and he's the author of the new book "Going Public."ĭAKIN CAMPBELL: Investors are decided the night before the shares start trading. ![]() But contrary to what the name implies, most IPOs are not actually public. For many growing companies, there is a rite of passage, the initial public offering, or IPO. ![]()
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