SPAC v. Direct Listing v. IPO?

What’s the difference between an IPO, a special purpose acquisition company (SPAC), and a direct listing?

[By staff reporters]

IPOs are a 6–12 month journey where a company works with investment banks and underwriters, who buy a bunch of shares and then sell them to investors in the public market during the actual IPO. Early investors are able to liquidate their shares, and the company raises new funds.


Direct listings skip the underwriting hullabaloo. But without that stability guarantee, direct listings can result in a more volatile opening. Some companies, like Coinbase, find that it’s worth it to keep their hard-earned money out of bankers’ hands.

SPACs, aka “blank-check companies,” offer yet another alternative path to public markets. A SPAC is a shell company that raises money through the traditional IPO process, then merges with a private company and takes it public. 


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Your thoughts are appreciated.



11 Responses

  1. SPACs

    SPAC popularity is shooting through the roof! The market is seeing huge increases in SPAC utilization. But like everything I’m finance – there could be additional risks to consider…



  2. Ana Miller
    Many thanks for the “like.”


  3. SPACs:

    “It’s a killer,” Buffett said about the rise of special purpose acquisition companies. Buffett said SPACs have made it even harder for Berkshire to strike a deal at an attractive price. “Frankly we’re not competitive with that. It won’t go on forever.”

    via Ann Miller RN MHA


  4. What is a “Cross-Over” Fund

    A “crossover” fund invests in both private and public companies.
    THINK: Tiger Global Fund.



  5. IPO – Oh No!

    Let’s check in on a few of the companies:

    Airbnb: It may be the most valuable hospitality company in the world, but its stock has dropped more than 37% from its high and now sits below its opening price. Yesterday, CEO Brian Chesky predicted the “travel rebound of the century” this summer.

    DoorDash: The delivery company’s stock was down 47% from its peak, but it popped more than 7% after hours following a strong earnings report yesterday. Revenue jumped 219% annually last quarter.

    Coinbase: In its first earnings report as a public company, the huge crypto exchange missed expectations and continues to trade well below its opening price. It said it would add more cryptocurrencies to its platform, including dogecoin in six to eight weeks.

    Snowflake: The cloud data firm backed by Berkshire Hathaway made a splash last fall as the largest software IPO ever, but it’s fallen more than 51% from its high.

    Bumble: Shares in the dating company dipped below their initial price of $43 yesterday after reporting a mixed bag of earnings this week.



  6. You could say Circle is on a roll.

    Yesterday, the crypto financial services company announced plans to go public via SPAC at a $4.5 billion valuation. In May, it made history with the largest crypto-related investment round ever recorded. And four years ago, it partnered with Coinbase to release USD Coin (USDC), which is now the world’s second-most popular stablecoin.

    Quick recap: Stablecoins are cryptocurrencies aimed at minimizing price volatility relative to a “stable” asset, like fiat currency. To some, that price stability makes them more attractive for use as currency—peer-to-peer payments, e-commerce, and ways to avoid credit cards and money transfer fees.

    In the world of stablecoins, USDC is second only to Tether (USDT). Both are pegged to the US dollar in a 1:1 ratio—e.g., if you own one, you should be able to redeem it for $1 in USD at any time.

    But, but, but: Though Tether has a market cap of ~$64 billion, compared to USDC’s ~$26 billion, some consider USDC a safer option. After a 22-month probe, the New York attorney general found that the company behind Tether overstated its USD cash reserves—and fined it $18.5 million.

    Looking ahead: In its investor presentation, Circle projected that USDC’s circulation will reach $190 billion—a sevenfold increase—in the next two years.



  7. IPO / SPACs

    Robinhood: In an updated filing, the stock trading app said it wants to raise $2+ billion at a valuation of as much as $35 billion. Expected to start trading next week, it’ll be the hottest IPO of the summer; 2021.



  8. SPACS Update

    2021 certainly was the year of the SPAC. Last year we saw ~ 500 companies go public via the method—more than twice that of 2020. As for self-driving SPACs, we saw 11 overall, according to PitchBook data.

    If we break it down by category, it came out to four SPACs for companies focused on vehicles themselves, one focused on general tech, and six focused primarily on sensor tech, specifically lidar.

    The listing that probably made the most headlines was Aurora Innovation’s $2 billion SPAC. The company is run by Google, Tesla, and Uber alumni, and it purchased Uber’s self-driving division last year.



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