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Capital Markets

OTC Markets’ growth raises questions over value of stock exchanges

OTC Markets shows that both medium-size domestic companies and large overseas ones can be publicly quoted in the US without exchange listings.

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Photo: iStock

Direct listings continued to trickle through in the second half of 2021.

US digital analytics company Amplitude, whose customers include Instacart, Shopify and Under Armour, achieved a $7 billion valuation on Nasdaq at the end of September. Online designer spectacles company Warby Parker quickly followed, achieving a $6 billion valuation on the New York Stock Exchange (NYSE).

It is no longer purely a US phenomenon. Wise, the remittance fintech formerly known as TransferWise, was valued at £9 billion in the first large direct listing on the London Stock Exchange in July.

Reports from Abu Dhabi suggest that listed conglomerate International Holdings Company was set for a direct listing of shares in Multiply, its technology investment subsidiary, on the Abu Dhabi Securities Exchange before the end of 2021.

Direct listings provide a way for interested parties to buy and sell existing equity that previously only changed hands through private negotiation, but without the need for management teams to sell the company story to providers of new capital.

The big one in 2021 came back in April. Cryptocurrency exchange Coinbase set an $86 billion valuation when its shares began trading on Nasdaq.


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