The SEC Just Greenlighted a New Way for Companies to Go Public and Raise Cash
Steven Khadavi, a partner in Troutman Pepper's Capital Markets Practice Group, was quoted in the Business Insider article, " The SEC Just Greenlighted a New Way for Companies to Go Public and Raise Cash."
Steven Khadavi, a capital markets partner at Troutman Pepper, said direct listings "are not for everybody." Companies should have an established reputation to back up their financial statements in the absence of the typical underwriting process.
Traditional IPOs have come under renewed scrutiny from critics due to big "pops," which occur when companies' shares are priced higher on the first day of trading relative to their original IPO price. Airbnb and DoorDash, for example, both went public via IPOs in December and saw huge pops that stunned the market. Airbnb's shares skyrocketed 115% in their first day, arguably costing the company and its early investors $4 billion. "That's money being left on the table for the companies," said Khadavi.