• Home
  • Latest
  • Fortune 500
  • Finance
  • Tech
  • Leadership
  • Lifestyle
  • Rankings
  • Multimedia

Trendingnow

1

Philanthropy leader at Warren Buffett and Bill Gates’ Giving Pledge says children of billionaires are pushing them to give their wealth away faster

2

'Skills nobody can take': Meet a 20-year-old with a 4.5 GPA who skipped college for technical school to land an 'AI-proof' career

3

Meet a 71-year-old who retired as a radiologist and professor, and now runs a banana-skewer business: ‘I never want to retire. Why would you do that?’

1

Philanthropy leader at Warren Buffett and Bill Gates’ Giving Pledge says children of billionaires are pushing them to give their wealth away faster

2

'Skills nobody can take': Meet a 20-year-old with a 4.5 GPA who skipped college for technical school to land an 'AI-proof' career

3

Meet a 71-year-old who retired as a radiologist and professor, and now runs a banana-skewer business: ‘I never want to retire. Why would you do that?’
FinanceBrainstorm Finance

What to Expect From Slack’s Direct Listing

Lucinda Shen
By
Lucinda Shen
Lucinda Shen
Down Arrow Button Icon
Lucinda Shen
By
Lucinda Shen
Lucinda Shen
Down Arrow Button Icon
June 19, 2019, 8:53 PM ET
Google source logo
Add Fortune on Google for similar content.

It may be psychologically pleasing to see shares of a company rise during its first day of trading following an initial public offering.

But in the case of a direct listing, investors might see the stock hit its high at the start of the day before sliding back down, said Joe Mecane, head of execution services at Citadel Securities during Fortune’s Brainstorm Finance conference in Montauk, N.Y.

That’s exactly what may happen with workplace messaging application Slack, which is set to start trading as a direct listing on the New York Stock Exchange as “WORK” Thursday, with a price of around $26 a share.

In a typical IPO, underwriters build a book of buyers and sellers and are expected to stabilize shares of a company for a period after it debuts.

In the case of a direct listing, the underwriters are cut out. Instead, the market maker is expected to figure out supply and demand on the day of the listing. But since all shares sold come from existing shareholders, supply volume isn’t immediately clear. Citadel Securities is Slack’s market maker.

“In a normal IPO, you’re more worried about buyers than sellers showing up,” Mecane said. But in the case of a direct listing, the selling shareholders “will often just wait because they want to see what is going to happen. In which case you can end up in a situation where you have buyers showing up, but you’re not quite sure whether or not the supply is in the market.”

As the trading day continues, selling shareholders typically start entering the market and the balance evens out.

Although Spotify—and now Slack—have opted for direct listings, companies and investors are just beginning to understand how they operate. So Slack’s offering will be watched closely. “It could be very good for direct listings if Slack goes well,” says Leslie Pfrang, a partner at Class V Group, which advises companies going public.

Slack’s listing comes at a time when investors are wary of the ongoing China-U.S. trade war, a backdrop that certainly didn’t help Uber on its dismal first day on the market. But, in the case of direct listings, “Market conditions matter a little bit less than in a traditional IPO,” says John Tuttle, Chief Commercial Officer at the NYSE.

More must-read stories from Fortune:

—Slack is doing a direct listing instead of an IPO. What is that?

—4 things investors need to know about Slack’s direct listing

—Slack’s CEO was raised in a log cabin—and now he’s worth $1.3 billion

—When the next recession hits, four good things could happen

—The Huawei ban is hurting some companies, but it may help others

—Listen to our new audio briefing, Fortune 500 Daily

Don’t miss the daily Term Sheet, Fortune‘s newsletter on deals and dealmakers.

About the Author
Lucinda Shen
By Lucinda Shen
See full bioRight Arrow Button Icon

Latest in Finance


Most Popular

Fortune Secondary Logo
Rankings
  • 100 Best Companies
  • Fortune 500
  • Global 500
  • Fortune 500 Europe
  • Most Powerful Women
  • World's Most Admired Companies
  • See All Rankings
  • Lists Calendar
Sections
  • Finance
  • Fortune Crypto
  • Features
  • Leadership
  • Health
  • Commentary
  • Success
  • Retail
  • Mpw
  • Tech
  • Lifestyle
  • CEO Initiative
  • Asia
  • Politics
  • Conferences
  • Europe
  • Newsletters
  • Personal Finance
  • Environment
  • Magazine
  • Education
Customer Support
  • Frequently Asked Questions
  • Customer Service Portal
  • Privacy Policy
  • Terms Of Use
  • Single Issues For Purchase
  • International Print
Commercial Services
  • Advertising
  • Fortune Brand Studio
  • Fortune Analytics
  • Fortune Conferences
  • Business Development
  • Group Subscriptions
About Us
  • About Us
  • Press Center
  • Work At Fortune
  • Terms And Conditions
  • Site Map
  • About Us
  • Press Center
  • Work At Fortune
  • Terms And Conditions
  • Site Map
  • Facebook icon
  • Twitter icon
  • LinkedIn icon
  • Instagram icon
  • TikTok icon
  • YouTube icon

    Latest in Finance


    Most Popular

    © 2026 Fortune Media IP Limited. All Rights Reserved. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice | Do Not Sell/Share My Personal Information
    FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. FORTUNE may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.