A direct listing would be very unfair to the banks that have patiently waited years to take a multi-billion-dollar chunk of Stripe’s upside in exchange for setting the IPO price (integer between 20 and 50).
but at least in an IPO the company would get a financing round, and the banks get to manipulate the market with a stabilizing bid indefinitely
direct listings completely rely on retail buyers for liquidity, and even in the frothiest markets that's not enough money in the face of all employees and the company dumping shares immediately
> direct listings completely rely on retail buyers for liquidity, and even in the frothiest markets that's not enough money in the face of all employees and the company dumping shares immediately
IPOs typically have a lockup period, which means that employees will always be selling to retail buyers, whether on Day 1 with a direct listing or Day 90/180/etc. when the IPO lockup expires.
It's not clear to me that it makes a difference for employees either way. It's not like the stock price on Day 90-180 are still thinking about what mechanism the company used to go public 3-6 months ago. At that point the stock price is mostly based on the two new 10-Qs that have been filed since then, plus additional current information like market conditions, etc.
Better for the company, better for the employees, better for external speculators.
A stabilizing bid by the underwriter is effective market manipulation that pretends there is more demand than there really is. It can be retracted at any time as well. Outside of an IPO this is illegal.
They can keep the confidence game going for 90-180 days, and the other aspects of an IPO are better for the company since there would be no reason to sell even more shares since they sold a piece of the company at a highest valuation to the banks in the IPO.