Direct Listings Split Up the IPO
Also insider trading, payment accounts and a Goldman movie.
Here is a very simple three-period model of corporate finance:
Traditionally, step 1 occurs while the company is private: It raises venture capital in private funding rounds. Step 2 occurs when the company goes public: It does an initial public offering to raise money, and the banks leading the IPO carefully select big investors and allocate shares to them. Step 3 starts the next day: The IPO investors, who were carefully chosen by the banks because of their support for the company and their plans to hold for the long term, turn around and dump their stock into a rising market, where it is bought by retail investors and others who didn’t have the clout to get an allocation in the IPO.