Direct Listing

A direct listing refers to an approach through which a company can go public and list its shares on a stock exchange without raising capital through a traditional initial public offering (IPO). Unlike an IPO, which concerns issuing new shares to raise funds, a direct listing qualifies existing shareholders, such as founders, employees, and early investors, to market their shares directly to the public. The company does not allocate new shares or raise additional capital in a direct listing. Instead, it allows existing shareholders to sell their shares to interested buyers on the open market. This method lets the market specify the price of the shares based on supply and demand dynamics.