how a dpo is traded
although an issuing company can raise funds from the company through a dpo a trading exchange platform for its securities will still not be available unlike an ipo that usually trades on the nyse or nasdaq after its offering a dpo will not have such a trading platform but can opt to trade in the over the counter markets otc like otc securities dpo securities may face illiquidity and risk if they are not registered and do not conform to the requirements of the sarbanes oxley act the number of major companies since 2018 to opt for a direct listing rather than an ipo they are spotify in april 2018 slack in june 2019 and coinbase in january 2021 101112 however slack was purchased by salesforce in july 2021 and is no longer listed on the exchange 13prominent examples of dposone of the earliest notable dpos was in 1984 by ben cohen and jerry greenfield two entrepreneurs who needed approximately 750 000 for their ice cream business they advertised their ownership stakes through local newspapers for 10 50 per share with 73 500 available offering 17 5 of the company their loyal fan base in vermont took advantage of the offer and the company ben jerry s ice cream raised the needed funds in a few months 14popular music streaming service spotify spot launched a direct public offering on april 3 2018 spotify opted to underwrite its own shares via a direct listing meaning that there is no supporting bank to buttress share prices by purchasing any additional stock if necessary at the same time spotify s dpo was unique among offerings of this type spot is also listed on the new york stock exchange in previous cases in which companies have listed on exchanges as part of a dpo there have typically been other special circumstances such as previous bankruptcy filings a shift from one exchange to another and so on spotify was not subject to any of these conditions as a company which already enjoyed massive popularity and cash flow positivity prior to its public offering spotify was able to bypass the typical publicity and fundraising efforts involved in an ipo 12on june 20 2019 enterprise software company slack debuted on the new york stock exchange via a direct listing the stock opened at a share price of 38 50 more than 48 above the 26 per share reference price set by the nyse 1516 slack was purchased by salesforce in july 2021 and is no longer listed on the exchange 13