Startup News

Instacart considers direct listing while skipping the IPOs

Considering the chances to lose out money through an initial public offering, Instacart is contemplating going public through a direct listing.

The offering through IPO is not of many benefits to the company as its offering is too low.

The company is yet to take a decision and has a concern as the other US companies that went public through IPO experienced trading up approximately one third more, at the end of first day in 2019.

Recently the company is not in emergent need of money as during the pandemic the customers shifted more towards online grocery shopping and depending less on the local market.

According to the estimation by the investment bankers Instacart can value at $50 billion in the stock market.

IPOs are in the talk since last year around the pandemic period but now their admiration is draining as the companies are now in favor to go public through mergers with special purpose acquisition companies (SPACs) or direct listings.

As cited by Dealogic, there were 208 IPOs excluding SPACs last year which is a record since 2015.

Additional companies that went public through direct listing are Palantir Technologies Inc and Asana Inc.

In case if the companies go public through direct listing the insiders can directly sell their shares without any wait for a few months.

Under the direct listing, a company can sell the share in the open market to raise capital without any legal constraints.

Some handful companies that may go public through direct listing in future are US gaming platform- Roblox Corp, US cryptocurrency exchange- Coinbase Global Inc.

Online broker Robinhood, and robotic software startup UiPath Inc may also opt for direct listing over an IPO in the impending time but have refused to comment on this as of now.


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