4 ms·

Matt Levine on Slack direct listing from a few weeks ago... https://www.bloomberg.com/opinion/articles/2019-01-11/direct-listings-are-a-thing-now https://www.b

by certmd 8y ago

Matt Levine on Slack direct listing from a few weeks ago... https://www.bloomberg.com/opinion/articles/2019-01-11/direct-listings-are-a-thing-now https://www.bloomberg.com/opinion/articles/2019-01-11/direct...

airstrike 8y ago
Thanks for sharing. I swear, if you want to understand Wall Street, all you really need is Matt Levine. It's more informative than seemingly anything else out there.
- davepeck 8y ago
  Agreed. Levine has a unique ability to peer deep inside the underlying mechanisms of modern finance and explain them clearly. Levine's writing reminds me somewhat of John Brooks, although Brooks was perhaps more interested in personas than mechanics. (If you've never read the Business Adventures collection, it's worth picking up!)
- mruts 8y ago
  I don't think I've ever come across any written material on the internet that's better than Money Stuff. Matt Levine is a hero (and clearly very smart and measured in his thinking).
mylons 8y ago
great read. levine points out that lockout periods are basically a condition for traditional IPOs by the lead investors, and isn't required in a direct listing. assuming direct listings become a thing, inevitably there will be a big firm that does it and doesn't require a lockout period. i cannot wait to see what happens in that case.
- aston 8y ago
  Spotify skipped their lockout period, with pretty boring results.
  - rwoods 8y ago
    Wouldn't "boring" results be good for Spotify? Rather than having tons of people selling right off the bat?
  - mylons 8y ago
    ahh, neat! i assumed they didn't because i assumed levine would have said that in the article. maybe i just glossed over that part.
  - ummonk 8y ago
    Spotify seems to have gone up in the months following IPO, which suggests there is enough liquidity on the market to absorb stock sales by employees and a lockout period is unnecessary.
    - mylons 8y ago
      hard to say with just 1 event. i could see interesting things happening if uber were to direct list without a lockout. there's a lot of hype, value, and losses.
- Stratoscope 8y ago
  Oh, I love lockout periods so much! About 20 years ago I worked for a company that went public, and for a while my shares were worth 1.2 million dollars. But I was locked up for 180 days. By the end of the lockup my shares were down to $10,000. A bit of a drop from the exciting heights of imaginary paper money I had earlier that summer. But hey, $10,000 I wasn't expecting is better than nothing, right? Well... Just before they went public they informed me that I needed to come up with $30,000 within 24 hours to exercise my options. So I maxed out my credit cards and got them the money. A few months later they told me, "Oops, we had you in the wrong category, you didn't need to pay us that $30,000 after all, so here's a check for your money back." With no interest, of course, while I'd been paying credit card interest on that money the whole time. Of course the executives and investors weren't locked up at all, and they got to take quite a bit of money off the table while the money was still good. Yes, I love lockout periods!
hinkley 8y ago
I didn't read the whole thing yet so I don't know if he covers this: I think many of us (or at least a few loud members) in the tech community have started to see underwriting as a bad form of cronyism. The point jump on opening day becomes substantially about putting money in the pockets of a favored set of investors. Half of that comes from frothing up the public, but the other half comes out of the pockets of the pre-IPO investors and the company. That's not okay. We know that in a hot neighborhood you want to price your house a little low to get a bidding war going. I get that something similar happens in the stock market. But that's an art of shaving 5-10% off hoping you yield an extra 5-10% over your original price point. We're seeing much, much bigger spreads than that with IPOs, which I take to mean that everyone but the underwriters and their friends are getting screwed.
- myth_buster 8y ago
  Tangentially I suppose. > The story is that there was a big old legacy business that comfortably sold a standard package of features for a lucrative price, and then a bunch of tech startups came in and questioned everything; they unbundled the service so customers could get what they wanted rather than what the legacy players wanted to sell. It’s just that the tech companies didn’t do it as competitors, by offering the disruptive unbundled product, but as customers, by demanding it.
- samstave 8y ago
  And this is exactly why i immediately lose all respect for any company that choses goldman as their handler in an ipo.
  - wilkskyes 8y ago
    All respect? Really? And immediately? If one inconsequential event like this warrants such an extreme reaction respect will be in short supply everywhere.
    - sct202 8y ago
      I don't know if it's inconsequential. But Goldman definitely has a well deserved tarnished reputation, especially in recent news of their actions that involved the 1MDB fund.

by certmd 8y ago

airstrike 8y ago

Thanks for sharing. I swear, if you want to understand Wall Street, all you really need is Matt Levine. It's more informative than seemingly anything else out there.

davepeck 8y ago
Agreed. Levine has a unique ability to peer deep inside the underlying mechanisms of modern finance and explain them clearly. Levine's writing reminds me somewhat of John Brooks, although Brooks was perhaps more interested in personas than mechanics. (If you've never read the Business Adventures collection, it's worth picking up!)
mruts 8y ago
I don't think I've ever come across any written material on the internet that's better than Money Stuff. Matt Levine is a hero (and clearly very smart and measured in his thinking).

mylons 8y ago

great read. levine points out that lockout periods are basically a condition for traditional IPOs by the lead investors, and isn't required in a direct listing. assuming direct listings become a thing, inevitably there will be a big firm that does it and doesn't require a lockout period. i cannot wait to see what happens in that case.

aston 8y ago
Spotify skipped their lockout period, with pretty boring results.
- rwoods 8y ago
  Wouldn't "boring" results be good for Spotify? Rather than having tons of people selling right off the bat?
- mylons 8y ago
  ahh, neat! i assumed they didn't because i assumed levine would have said that in the article. maybe i just glossed over that part.
- ummonk 8y ago
  Spotify seems to have gone up in the months following IPO, which suggests there is enough liquidity on the market to absorb stock sales by employees and a lockout period is unnecessary.
  - mylons 8y ago
    hard to say with just 1 event. i could see interesting things happening if uber were to direct list without a lockout. there's a lot of hype, value, and losses.
Stratoscope 8y ago
Oh, I love lockout periods so much! About 20 years ago I worked for a company that went public, and for a while my shares were worth 1.2 million dollars. But I was locked up for 180 days. By the end of the lockup my shares were down to $10,000. A bit of a drop from the exciting heights of imaginary paper money I had earlier that summer. But hey, $10,000 I wasn't expecting is better than nothing, right? Well... Just before they went public they informed me that I needed to come up with $30,000 within 24 hours to exercise my options. So I maxed out my credit cards and got them the money. A few months later they told me, "Oops, we had you in the wrong category, you didn't need to pay us that $30,000 after all, so here's a check for your money back." With no interest, of course, while I'd been paying credit card interest on that money the whole time. Of course the executives and investors weren't locked up at all, and they got to take quite a bit of money off the table while the money was still good. Yes, I love lockout periods!

hinkley 8y ago

I didn't read the whole thing yet so I don't know if he covers this: I think many of us (or at least a few loud members) in the tech community have started to see underwriting as a bad form of cronyism. The point jump on opening day becomes substantially about putting money in the pockets of a favored set of investors. Half of that comes from frothing up the public, but the other half comes out of the pockets of the pre-IPO investors and the company. That's not okay. We know that in a hot neighborhood you want to price your house a little low to get a bidding war going. I get that something similar happens in the stock market. But that's an art of shaving 5-10% off hoping you yield an extra 5-10% over your original price point. We're seeing much, much bigger spreads than that with IPOs, which I take to mean that everyone but the underwriters and their friends are getting screwed.

myth_buster 8y ago
Tangentially I suppose. > The story is that there was a big old legacy business that comfortably sold a standard package of features for a lucrative price, and then a bunch of tech startups came in and questioned everything; they unbundled the service so customers could get what they wanted rather than what the legacy players wanted to sell. It’s just that the tech companies didn’t do it as competitors, by offering the disruptive unbundled product, but as customers, by demanding it.
samstave 8y ago
And this is exactly why i immediately lose all respect for any company that choses goldman as their handler in an ipo.
- wilkskyes 8y ago
  All respect? Really? And immediately? If one inconsequential event like this warrants such an extreme reaction respect will be in short supply everywhere.
  - sct202 8y ago
    I don't know if it's inconsequential. But Goldman definitely has a well deserved tarnished reputation, especially in recent news of their actions that involved the 1MDB fund.