A direct listing is an alternative to Initial Public Offerings (IPOs) in which a company does not work with an investment bank to underwrite the issuing of stock. While forgoing the safety net that an underwriter provides, a company uses a quicker, less expensive way to raise capital. However, the opening stock price will be completely subject to market demand and potential market swings.

In a direct listing, instead of raising new outside capital like an IPO, a company's employees and investors convert their ownership into stock that is then listed on a stock exchange. Once the stock is listed shares can be purchased by the general public and existing investors can cash out at any time without the 'lock up' period of traditional IPOs. Procore is a recent example of a company that has opted to skip a traditional IPO process and instead list its shares directly on an exchange.

Procore [PCOR, listed on NYSE] used a Direct Public Offering (DPO, Direct-Listing) process 05/19/2021 rather than an IPO. Did it work? What are the pros and cons of a DPO?

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As of May 13 2023 Procores stock price has increased since its direct listing on May 19 2021 However ... View the full answer