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Bypassing traditional IPO, Slack to start trading via direct listing

Illustration: Aïda Amer/Axios

Slack Technologies, the workplace chat service, will go public on the New York Stock Exchange today via a direct listing.

Why it matters: It's only the second direct listing from a major tech company and the first from a non-consumer service (Spotify blazed the trail last year). And if it’s a success, it could push Airbnb closer to taking the same path.

  • The NYSE issued a $26 per share reference price last night, which would give the company a valuation of $16 billion, though it's just a suggestion and could ultimately start trading at a lower or higher price.

What's happening: Slack isn't using underwriters, nor issuing new stock, in the manner of a traditional IPO.

  • That also means it's not raising new capital — and it doesn't really need to.  
  • Instead, it's effectively allowing existing stockholders to begin trading their shares on the public markets.
  • Slack's bankers, advisers, and market maker will figure out an initial price based on trade orders tomorrow — meaning, they will see how much demand there is.
  • Also, Slack stockholders are not subject to the usual lock-up periods, which means employees, for example, will get to cash out (if they want).

Be smart: Insiders will be watching the volatility of Slack's price. They will want to keep the ride smooth.

Go deeper: Direct listings challenge benefits of traditional IPOs for unicorns