7 ms·
Stupid question but how do they create liquidity? Don't all the money go into the shareholders' pockets who sell in the listing?
by Kiro 8y ago
Stupid question but how do they create liquidity? Don't all the money go into the shareholders' pockets who sell in the listing?
- Axsuul 8y agoShareholders can cash out
- adenadel 8y agoAll shareholders will be able to sell publicly => liquidity
- kgwgk 8y agoLiquidity means that people can sell/buy the stock easily. It has nothing to do with the company’s financials.
- deleted 8y ago[deleted]
- groestl 8y agoThat's one definition of liquidity (which applies here). In the context of companies liquidity can also mean: assets to pay short-term liabilities (based on the article, it seems Slack has no problems in that area).
- richardwhiuk 8y agoNormally when you file to go public you create new shares, which are sold on the market for amount, which gives you cash.
- 8ytecoder 8y agoNormally, yes. But this is a direct listing.
- richardwhiuk 8y agoI'm not an expert, but can they not issue new shares, and then directly market those on the public market?
- lmm 8y ago> Stupid question but how do they create liquidity? They just open for trading and hope that the buyers and sellers manage to find a reasonable price. (It works better if the company already has a relatively active "secondary market" - many of these private companies do, particularly if they grant stock to employees). > Don't all the money go into the shareholders' pockets who sell in the listing? Listing just makes it easier for shareholders to trade, yes. At some future point the company itself might sell stock (what would usually be called a "secondary offering" though technically the first one would be their IPO) or buy stock (a "buyback").
- skinnymuch 8y agoThis IPO is a public listing so the company itself isn’t selling stock.