Sources: Palantir is planning to go public through a direct listing of its shares in late September
not to mention in more volatile markets. @rileycnbc : ...and new this evening: Palantir planning a direct listing for late September. The company is in the process of raising $961 million, $550 million of which it has already secured, according to a July SEC filing. https://www.bloomberg.com/...
Context & Ripple Effects
Palantir's path to the public markets has been two years in the making: sources reported back in October 2018 that the data-mining firm was weighing an IPO as soon as H2 2019, with some bankers floating a valuation of up to $41B. By June 2020 it had moved to registering an S-1 confidentially, targeting a fall debut.
The twist in this report is the mechanism: rather than a traditional underwritten IPO, Palantir plans a direct listing in late September — no new shares sold at listing — while separately raising $961M privately, $550M of which was already secured per its July SEC filing. The company is effectively buying its growth capital in advance so it can list without an offering.
First-order effects
- Existing shareholders and employees get liquidity on day one without dilution from a primary offering, but there is no underwriter book-build to set a price — the market discovers it cold, which is why Palantir later told investors to expect trading around $10 a share, valuing it near $22B.
Second-order effects
- Without banker price support, the gap between private marks and public reality shows immediately: after the S-1 confirmed a $580M net loss on $742.6M of 2019 revenue, the stock closed its first day at $9.50, roughly a $20.9B market cap — about half the $41B bankers had suggested in 2018, resetting what late-stage data-analytics companies can claim they are worth.
Third-order effects
- If the pattern holds, mega-valued private tech companies increasingly treat direct listings plus pre-IPO private raises as a substitute for the traditional IPO, shifting pricing power from underwriting syndicates to open-market order flow and forcing banks to compete on advisory rather than distribution.
The trend: Large private tech companies are swapping traditional underwritten IPOs for direct listings paired with private raises, moving price discovery from bankers to the open market.