Final answer:
A direct listing is a private company's initial public offering (IPO) that is sold exclusively to institutional investors. This statement is False.
Step-by-step explanation:
A direct listing is a private company's initial public offering (IPO) that is sold exclusively to institutional investors. This statement is False.
An IPO is when a company sells its stock to the public, including institutional investors, as well as individuals, mutual funds, insurance companies, and pension funds. In a direct listing, a private company bypasses the traditional IPO process and lists its shares directly on a stock exchange.
For example, in a direct listing, like that of Slack and Spotify, existing shares are sold directly to the public without underwriters, which is different from an IPO where new shares are created and offered to the public with the help of underwriters.