Catch Up Quick

• The Center for American Progress projects 50% of day cares to go out of business

• Apollo leads a $5.5B deal for 49% of real estate affiliate of Abu Dhabi National Oil Co

• JPMorgan quant Marko Kolanovic says odds of a Trump election victory are rising

• The CDC announces an order to halt evictions through 2020 to curb virus spread

• Dr. Fauci states U.S. coronavirus cases are "unacceptably high" going into Labor Day

• Hotel owners warn the industry is in crisis and thousands may close forever

• Consumer confidence increased in late August as coronavirus cases declined

• Tesla ($TSLA) shares fall after its largest external shareholder reduces stake

• TikTok is less than two weeks away from Trump's acquisition deadline

• S&P 500 finished today's trading session at another record high

• U.S. manufacturing expanded for the fourth straight month

Thought of the Day

• Recently, direct listings have gained popularity among companies looking to go public

• This process circumvents the traditional IPO route, in which shares are bought and resold by investment banks, instead allowing the company to directly list their shares to the exchange

• However, with direct listings, companies have previously been unable to issue new shares— owners can only sell existing shares to the public

• While this provides stock holders with liquidity, it greatly restricts the ability to raise new capital

• Because so, direct listings have typically been viewed as inferior to traditional IPOs

• This past Saturday, the SEC changed this, approving a proposal from the NYSE that allows companies executing a direct listing to sell new shares and thus externally raise capital (NASDAQ is set to follow)

• In a traditional IPO, investment bankers set the stock price, often underpricing to achieve oversubscription, which leaves billions on the table for previous shareholders

• A direct listing employs a market based approach to match supply with demand, a far more accurate, natural pricing mechanism

The Bottom Lines

• Moving forward, direct listings lend founders, investors, and employees with stock options a bigger payday, while allowing the company as a whole to raise more capital to facilitate its growth

• I believe that this recent SEC approval is not only the beginning of the end for traditional IPOs, but a huge step forward for the overall development of U.S. equity markets