Palantir Technologies Inc.
the stock opened at $ 10 in its commercial debut on the New York Stock Exchange, giving the data company a valuation of around $ 22 billion as it became the latest tech company to try a direct listing.
The stock recently traded at $ 9.98, higher than the median prices of $ 7.31 and $ 9.17 where the stock changed hands in private trading in August and September respectively. At its recent level of trading, it is 37% above the reference price of $ 7.25 per share, an indicator set by the NYSE where no money changes hands.
The few direct listings that have happened to date have all been trading above their target prices on day one.
The Wall Street Journal reported last week that Palantir bankers had told investors that the stock could start trading around $ 1
The data mining software company became the fourth notable company to use the direct quotation model.
It also went public through a direct listing on Wednesday, with its stock trading rising on its debut. Only two other major companies –
Spotify technology SA
Slack technologies Inc.
—He had never completed direct lists before Wednesday.
Making a direct quote ignores investment banking underwriters, allowing companies to save millions of dollars in fees. It also means that companies don’t raise money for themselves. Instead, employees and early investors are typically able to cash out stock on the first day of trading as the stock is simply listed on the stock exchange and advisors match buyers and sellers.
Both Asana and Palantir have enlisted Citadel Securities as their designated market maker e
as the lead financial advisor for their debuts.
Strong debuts for the two quotes are the latest sign of strength in the IPO market as companies are rushing to go public and investors are especially hungry for tech quotes. U.S.-listed IPOs have raised more than $ 98 billion this year through Tuesday, according to data provider Dealogic.
This exceeds the amount raised in each full year of quotes from the technology boom of 1999 and 2000. If this pace continues, bankers, lawyers and executives say they anticipate that the IPO market will even exceed those years when measured by the amount of money raised .
“September will close to be the busiest month in NYSE history when it comes to new listings,” said John Tuttle, vice president and chief commercial officer overseeing global listings at the NYSE, referring to the number of new listings this month. “Even through the ups and downs [of 2020], the capital markets remained open for companies and investors “.
Strong investor interest in Palantir also comes as its founders put in place one of the most aggressive governance structures ever seen.
Tuesday’s direct listings duel was a balancing act for the NYSE, which had never dealt with opening two on the same day. Given the relatively untested nature of direct listings and their complexity, some people close to Palantir and Asana’s offerings had told the Journal that they were not thrilled that two happened on the same day.
Both Slack’s and Spotify’s direct listings fared fairly well, with the two companies closing 49% and 13% above their respective benchmark prices on their first day of trading.
Since then, the commercial success of the two companies has diverged. Slack closed on Tuesday at $ 26.97, 30% lower than last year’s first trading day. Spotify’s stock, meanwhile, was mostly languishing below its first-day closing price of $ 149.01 in 2018 until it rose this year. They closed on Tuesday at $ 242.45, up 63% from the close on day one.
Like many other technology companies that go public, Palantir has never made a profit. For 2019, it recorded a loss of $ 579.6 million, roughly even with 2018. The first half of 2020 showed an improvement, with a loss of $ 164 million compared to a deficit of $ 274 million in the same. period of 2019.
The shares of Palantir’s three co-founders – billionaire investor Peter Thiel, CEO Alex Karp and president Stephen Cohen – are structured so that they can become more powerful as men sell their stakes, according to declarations of titles. Through a unique feature of the voting structure, Mr. Cohen, for example, could still effectively control the company by owning a small portion of the shares.
The structure of a direct quote typically allows existing shareholders and employees to sell most or all of their shares immediately rather than waiting for the mandatory 180-day freeze in most traditional IPOs. Palantir is taking steps to limit the supply of shares on the market by allowing existing holders to sell only 20% of their shares until early next year. That shortage could serve to support the share price.
Meanwhile, Asana, a manufacturer of workplace tools for productivity and communication, has also had a strong debut. Its shares recently traded at $ 27.01, 29% above the reference price of $ 21. The company is run by CEO Dustin Moskovitz, one of the co-founders and first chief technology officer of
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