Friday, Jan 8th 2021

IPOs and SPACs and direct listings, oh my


This week, gaming business Roblox disclosed that it'd be pursuing a direct listing instead of the IPO that it had previously been planning late last year.

At the same time, fintech startup SoFi (which was previously said to have been contemplating an IPO) announced that it'd be going public by merging with a SPAC controlled by Social Capital.

IPO alternatives like SPACs and direct listings are undoubtedly gaining steam, and we believe this trend will continue to persist in 2021 as it did in 2020.

But what is the actual difference between all these alternative approaches, and what does it mean for investors?

In short, these differing methods simply allow companies to optimize for different types of corporate priorities - whether that be fees, speed, or liquidity.

Companies looking for the most reliable listing process would do best to opt for an IPO. When a company IPOs, it hires an investment bank to help distribute its shares to an attractive shareholder base before its shares go public, which can help prevent embarrassing early price flops.

Companies who want to minimize fees would do well explore direct listings. In direct listings, companies float their shares directly to the public and eschew the typical marketing and liquidity services of an investment bank.  

Companies who just want to go public simply and quickly tend to choose SPACs. SPACs are publicly-traded "blank check" companies designed to acquire private companies so that they can go public with a fraction of the regulatory burden.

In 2021, we expect the rise of IPO alternatives to be a popular theme in financial and business media. We may even see them achieve "buzzword" status as businesses and onlookers latch on the hottest new trend.

But for the outside investor, it's important to keep in mind that these are just listing methodologies as opposed to magical indicators of performance or fundamentals.

For the typical investor, what should matter the most at the end of the day remains the same - quality, fundamentals, and valuation.

Back to Research ↗

Learn with titan

Investment articles and resources

Become the smartest investor you've ever been through straightforward, easy-to-read investment articles.

What Is a Special Purpose Acquisition Company (SPAC)?

What Is a Stock Exchange & How Does It Work?

What Is Technical Analysis & How Does It Work?

How Are Stock Prices Determined?

Let's Get Started

Ready to become a client?

Create an account with us in two minutes.

Or scan to get the app

We're building the best investment platform, ever

Titan Global Capital Management USA, Inc ("Titan") is an investment adviser registered with the Securities and Exchange Commission (“SEC”). By using this website, you accept our Terms of Use and Privacy Policy. Titan’s investment advisory services are available only to residents of the United States in jurisdictions where Titan is registered. Nothing on this website should be considered an offer, solicitation of an offer, or advice to buy or sell securities. Past performance is no guarantee of future results. Any historical returns, expected returns [or probability projections] are hypothetical in nature and may not reflect actual future performance. Account holdings are for illustrative purposes only and are not investment recommendations. The content on this website is for informational purposes only and does not constitute a comprehensive description of Titan’s investment advisory services.

Refer to Titan's Program Brochure for more information. Certain investments are not suitable for all investors. Before investing, consider your investment objectives and Titan’s fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. The introducing Broker Dealer is Titan Global Technologies LLC, a registered broker-dealer and member FINRA/SIPC. Brokerage services are provided to Titan Clients by Apex Clearing, an SEC registered broker-dealer and member FINRA/SIPC. For more information, see our disclosures. Contact: 508 LaGuardia Place NY, NY 10012. Information provided by Titan Support is for informational and general educational purposes only and is not investment or financial advice.

© Copyright 2022 Titan Global Capital Management, Inc. All Rights Reserved.