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Direct listings: an alternative to IPOs

DPO word cloud
DPO word cloud

A Direct Public Offering (DPO), also known as a direct listing, is a way for companies to become publicly traded without a bank-backed Initial Public Offering (IPO). It's important that you understand the risks and opportunities of a direct listing, and do your research before investing.

What investors should know about direct listings

Direct listings are 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 of an underwriter provides a company with a quicker, less expensive way to raise capital, 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. Coinbase, Slack, and Spotify are recent examples of companies that have opted to skip a traditional IPO process and instead list its shares directly on an exchange.

How to participate in a DPO

If you are already a TD Ameritrade client, you will be able to place trades as soon as the shares are available in the open market.

If you don’t have an account with us yet, you will need to open and fund an account.



What are the differences between a DPO and an IPO?

What is the importance of an underwriter for an IPO?

Are there eligibility requirements or an indication of interest form to fill out to participate in a DPO?

What other companies have gone public via a DPO?

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Where can I lean more about investing in a direct listing?

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