Why Amplitude Went Public Through a Direct Listing Instead of an IPO

Amplitude (NASDAQ: AMPL) became the latest high-flying cloud stock to hit the public markets on Tuesday, debuting with a market cap exceeding $5 billion.

But the digital optimization specialist took an unconventional route to the Nasdaq, going public through a direct listing instead of a conventional IPO. Unlike an IPO, which offers a chunk of new shares to a select group of investors (generally banks and other institutional investors with access to these start-ups), a direct listing does not offer new shares to investors. It gives current shareholders a means to sell their shares on the public market, and in the process, any investor has the opportunity to buy them.

Amplitude employees celebrate its IPO. Image source: Amplitude.

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Source Fool.com