One Pandemic Later, Direct Listings See Some Blue Sky

Hot technology startups have traditionally raised the cash they needed to break into the big time through initial public offerings. IPOs became synonymous with instant wealth for company founders and those lucky enough to buy those shiny new shares. Then music-streaming service Spotify Technology SA went a different route, going public through a method called direct listing. Why a direct listing? While Spotify didn’t need new cash, its investors wanted to cash out. Workplace messaging platform Slack Technologies Inc. followed suit last year and Silicon Valley buzzed with speculation whether Airbnb Inc. or a dozen other tech unicorns might be next. Little of what was predicted has come to pass, though, until now.

When 2020 began, IPOs had lost some luster because of a string of limping former unicorns -- firms that had attained private valuations of $1 billion or more but stumbled after going public, Uber Technologies Inc. being the largest of them. Then the coronavirus pandemic hit and the economy plummeted, sapping appetites for innovation and risk. Airbnb, the highest-profile direct listing candidate at the time, first tapped the brakes on its plans to go public and then switched gears to a traditional IPO in which it would raise capital to offset the battering it took from the drop in travel. But in August, Palantir Technologies Inc. and Asana Inc. filed for direct listings and both are now planning their trading debuts on Sept. 30.