A tale of two direct listings



Hello, and welcome to equity shot are quick hit on breaking news I'm Natasha Mascarenas and today joining me to talk about a tale of not one. But two direct listings on the same Damn Day is Danny Creighton. How are you Danny doing? All right this is exciting. You know we went from a world of no direct listings to an occasional direct listening to multiple direct listings in the same day. So it's an exciting exciting morning. We can finally stop breaking up spotify in slack whenever we say the L word and reinvention Asana, and pollen tear, which are the two news heads we got today it's zoo of curiosities. But lots of great stuff to talk about where where do you WanNa start you WANNA. Start with Asana or palate here. What's more interesting to you I think I have to start with pollen tear and my big question is you've been tracking it through every. You know crazy filing, your high level thought was this a successful debut on the Stock Market for? Today I think it's a definitely a success. You know the stock from January two, thousand, nineteen onwards trading at around five to five, fifty, a share, and then in the last two or three months that price jumped to about nine dollars and sixteen cents as of September first, and so you know when when the reference price came out yesterday from the New York Stock. Exchange which was quoted at seven dollars and twenty five cents. A lot of people were like, wow, that's like a significant drop from nine sixteen like what happened particularly also last week we had the Wall Street Journal reporting they were looking for a ten dollar referenced price. You know none of those numbers were really good but look it's trading. Now it's live as we're. Doing the show, it's ten dollars and sixty one cents a share I'm. So it's better than all the numbers we heard before and it's up fifty percent on day one. So so part of me feels like this reference value was actually chosen precisely to give it a pop on day one you know if they were targeting ten bucks on Day One, this is sort of what they got and so a little bit of a lower reference price might have given them a little bit more of A. Psychological boost on on day one. So I, I think overall to success. Do you. Can you talk me a little bit about how we're trying to value the company right now I feel like I'm seeing a bunch of different numbers out there. Do we have an understanding of its fully diluted market value? We do there's still a little bit abate mostly because Peletier gives multiple numbers for the number of care. So it gives us one point six, billion shares outstanding two point one fully diluted two point one billion fully diluted than two point five billion fully fully fully diluted and so. I would say that its current share price, we would call it around twenty, four, billion in evaluation, which is an uptick from its its last rounds. Again at you know for a seventeen year old company to have the sort of strong debut on Wall Street I think it's pretty good. All things considered. Okay. Cool. I'll put a pin in Pailin tear, but I do want to talk about their lock-up period later, run me through Asana numbers I. saw it opened at a five point two billion value. Yes it's on a similar story. So yesterday, The New York Stock Exchange released a reference value of twenty one bucks per share. It zoomed straight out onto the public market. So it debuted, it's currently sitting at twenty eight dollars a share up thirty three percent on day one so far it's up to about I. Think it peaked at five point, two billion, and as of now is more like three point five, three point seven, five, billion market CAP. But again, that's actually significantly higher than his last valuation, which was an inlet late twenty, eighteen around one and A. Half billion dollars so either oke across the board I think both of these issues you know there's always a lot of risk drake listings. As you pointed out Natasha there haven't been that many is this sort of a novel mechanism. They're still a little bit unclear and exactly how they work, and so it's great to see again similar to slack spotify you know these are two enterprise. Companies to again totally different from the more consumer is random companies particularly spotify, which has tens of millions of consumers who might be retail investors buying into the stock. Most people haven't used the Sauna and certainly must people haven't used Pailin tear and so to see the kind of strength on the markets and the first day is is enticing for other companies considering the direct listing model. Right There I feel like pollen tears total customer base was what one? Hundred Fifty, company, hundred, twenty-five customers. That's a lot of customers Doing Gospel distanced. Something it's probably my favorite statistic about the company and I think I saw Dan Prime tweeting the other day that you know it's no longer going to be a secret of company. So we can stop calling it as such. This is the end of that right that confrontation about pollen tear for. So long we've been having well I, I will say. This about an hour ago. So may not be true today. A ASANA has an investor relations page like a standard like every company who publicly trades Peletier does not like it actually does not have as as of an hour ago that I looked up I could not find an investor relations page for here, which which tells you everything you need to know about the company I, feel like that is like in a beautiful one sentence or describes his relationship with investors, but but I think you're absolutely right you. Know despite the fact that only one, hundred, twenty, five customers despite the fact that took seventeen years three hundred grew it's growing from seven hundred, forty, three, million in revenue last year in fiscal year twenty, nineteen, it gave a revenue projection for twenty twenty about one point, five, billion to it's a growth company. It's SAS more and more SAS today than it was in the past where it was more services driven. So again, it's a positive story despite all the kerfuffle around its governance the last couple weeks do you Do you feel like the direct listing method might now take on more popularity. I. Mean. Maybe in some way, but can we even is? Is it enough of a success? You'd think that other companies might follow suit now that it's not just spotify that that did this. I think the more the merrier right I think Palentinian particular raised capital round back in. July right which was sort of what I was told from some insiders essentially the IPO that was the IPO and then direct listings just the actual market exchange. So I think we're GONNA see more companies taking this approach of bifurcating the capital, raise the float that you would normally do a IPO and just the actual just GonNa Start. Trading today and you know I think that that allows you more time to create the right narrative the right story of and also separates what is a a pretty intense kind of crisis driven process the road show getting the company ready the SEC filings separating out at out you don't put all your eggs in one basket. You can do it in stages and I think more and more companies undertake that approach going forward. My question to is and I'm sure our listeners are curious is with all direct listings. There's no shares offered by the company when the when it debuts and so when we see these prices I, guess how much of them are they vanity metrics much of their HABITA- goals, how important are they for us to care about and think about? I wanted to be precise. So there are no new shares offered by the company. So there's no dilutive in an IPO generally have fifteen, maybe twenty percent new shares offered to the public. There are no new shares but many of the insiders have to pay taxes capital gains they actually do have to sell shares. So you know so far this morning already thirty five, million shares of have already been traded and We have on Pailin tear thirty, two, hundred, and thirty million. Shares sold today, right? So already, there's a market, there's clearly tens of millions of shares being sold. So these prices are real or Israel as any other IPO in which people are you know figuring out what's going to happen? You know the next checkpoint for both of these companies is gonNA come in a couple of weeks when they report their next quarterly earnings and I think by then you'll start to see the analysts get comfortable the companies understand the next steps and what's happening after. And you're speaking with Dustin Moskovitz later today the founder of Asana. So any questions on that? You can kind of tease out right now. Well, I was told. The pure folks. About our stock imagery because apparently no longer has sideburns to. Join, the Line of people that complain but it's like you know there's the old line about taking a haircut. Up Thirty, five percents of they actually gained hair on the market today speak. Clearly. sideburns maybe somewhere else. But? No I. THINK WE'RE GONNA be really interested because some unique company in which its founders, Dustin Moskovitz who Justin Rosenstein, who both met each other at facebook actually majority of the company outright right. We just never see or very rarely see tech companies where the founding to CEO's and and COO own like outright majority like not just a majority of the voting because of class, a class B shares but they just outright own about thirty two percent of the company I believe doesn't owns thirty six. Percent of the company outright and just knowns around sixteen point, one percent and so to me like I'm just curious because it's just a different path for a company it was a slower growth company capital much more efficiently grew much more methodically and the founders sort of maintained ownership over time in a way that most other founders do not think the other. The other thing to put out here is Asana has no lockup though the similar to spotify Ed to black as listing all the shares are available for trade to anyone. Who any insider anyone who owns a share of on this morning can put it on the market and sell it Here is the complete opposite pallares pioneering this new kind of fusion of the IPO and the direct listing one would argue maybe the worst of both of those processes but actually a direct listing with a lockup and so only roughly twenty eight to twenty nine percent of pollen. Tear shares are even available for sale at all with the rest in lockup and market standoff agreements that will expire over. The next calendar year. So you know there's a lot more to wait on right. There's not as much liquidity with Pallares could actually harm the stock price. They might be a little bit inflated right now because there's limited number of shares available for trade, we'll have to watch and see but again, it'll be interesting to see if other companies start to do a directing the lockup because clearly Palin tear has not suffered tremendously using this model. So again, another tool in the tool chest and uber do something similar with lock-up period. mean. They did like all IPO's. Underwriter from a bank, they have lockups in place mostly to make sure that there's not a mass rush to the exit. They don't want hundreds of millions of shares at any price willing to be sold. They WANNA, kinda manager coming out because they're putting oftentimes their own money up through the green shoe at stake, and so again, that's what made direct listings unique is that there wasn't this lockup employees are free to do on day one through whatever they don't have to wait six months as is customary. So again, we'll see kind of where the the system lies in the future. As you know, the New York Stock Exchange also got approval to do a direct. Listening with a capital fundraise so we've gone from this world of like there's an IPO and that's the only way to go public to. You can do a direct listing, a direct listening with a lockup, a direct listening without lockup address listening lock-up in a capital fundraise like you can do anything you want. You know it's it's the it's the Netflix of going public. So to speak I, see the headline now airbnb goes public through a through a pollen tear style direct listing. It's just going to happen and it's going to be horrible but we will be back here to talk about it as always every shareholder gets a free party house for one night so. That'll be the new innovation going on there, but but that's a sonnet that is Pelham Tear Ford they an and we'll have more to come in the next week.

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