Palantir Technologies Inc.
the stock opened at $ 10 on its New York Stock Exchange debut, valuing the data company at approximately $ 22 billion as it became the latest technology company to try its hand at direct listing.
The stock recently traded at $ 9.98, higher than the average of $ 7.31 and $ 9.17, where the stock traded in private trades in August and September, respectively. At its last trading level, it is 37% above the reference price of $ 7.25 per share, a benchmark set by the NYSE, where there is no money to change hands.
Several direct listings that have occurred so far have traded above reference prices on the first day.
Last week, the Wall Street Journal reported that Palantir bankers had told investors that the shares could start trading around $ 1
The data retrieval software company became the fourth notable company to use the direct enumeration model. Asana Inc.
also went public through a direct listing earlier Wednesday, with stock trading higher in its debut. Only two other large companies – Spotify Technology TO
and Slack Technologies Inc.
– Has he ever completed direct lists before Wednesday.
Making a direct list helps investment banking insurers, allowing companies to save millions of dollars in fees. It also means that companies do not raise money for themselves. Instead, employees and early investors are usually able to redeem stocks on the first day of trading, as the shares are simply listed on the stock exchange and the advisors match the buyers and sellers.
Both Asana and Palantir have included Citadel Securities as their designated market maker and Morgan Stanley as their lead financial advisor for their debuts.
The strong debuts for both listings are the latest sign of strength in the IPO market, as companies are rushing to go public and investors are particularly hungry for technology listings. U.S. IPOs raised more than $ 98 billion this year by Tuesday, according to data provider Dealogic.
This exceeds the amount raised in each full year of listing after the technology boom of 1999 and 2000. If this pace continues, bankers, lawyers and managers say they expect the initial public offering market to even win those years, measured by the money raised.
“September will be the busiest month in NYSE history when it comes to new listings,” said John Tuttle, vice president and chief commercial officer who oversees global listings on the NYSE, citing the number of new listings this month. “Even through the ups and downs [of 2020], capital markets remain open to companies and investors. “
The strong investor interest in Palantir comes even when its founders have created one of the most aggressive management structures ever seen.
Tuesday’s direct list of duels was a balancing act for the NYSE, which has never dealt with the opening of two on the same day. Given the relatively untested nature of the direct lists and their complexity, some people close to Palantir and Asana’s proposals had told the Journal that they were not excited that two were happening on the same day.
Both Slack’s and Spotify’s direct listings went fairly smoothly, with the two companies closing 49% and 13% higher than their respective reference prices on their first trading day.
Since then, the commercial success of the two companies has differed. Slack closed on Tuesday at $ 26.97, 30% below where it closed on its first trading day last year. Shares of Spotify, meanwhile, mostly stayed below its closing price for the first day of $ 149.01 in 2018, until they shot higher this year. They closed at $ 242.45 on Tuesday, up 63% from the first day.
Like many other technology companies that go public, Palantir has never made a profit. For 2019, it reported a loss of $ 579.6 million, approximately even with 2018. The first half of 2020 showed an improvement, with a loss of $ 164 million compared to a deficit of $ 274 million for the same period in 2019.
Shares of Palantir’s three co-founders – billionaire investor Peter Teal, CEO Alex Carp and President Stephen Cohen – have been structured to become more powerful as men sell their shares, according to securities claims. Through a unique feature of the voting structure, Mr. Cohen, for example, can still effectively control the company by owning a small share.
The direct listing structure typically allows existing shareholders and employees to sell most or all of their shares immediately, instead of waiting for a 180-day block in most traditional IPOs. Palantir is taking steps to limit the supply of shares on the market, allowing only existing holders to sell 20% of their shares until the beginning of next year. This shortage can serve to strengthen the share price.
Meanwhile, Asana, a maker of workplace tools for productivity and communication, also had a strong debut. Its shares were recently traded at $ 27.01, which is 29% above the reference price of $ 21. The company is run by CEO Dustin Moskowitz, one of the co-founders and first chief technology officer of Facebook. Inc.
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