Direct listings approved by SEC... how ****ed are the banks?

Maybe they could just stop drastically underpricing IPOs

this is great for tech/growth hedge funds tho - shrinking number of public companies/longer time to IPO decreases the opportunity set for public markets investors, easing the going public process increases the opportunity set 

This is more of a hit to institutional investors than banks. Banks still advise and collect fees on direct listings (albeit less fee pot in total to reward a large number of banks). It's good for financial markets to have traditional IPOs and direct listings, but there are reasons IPOs are structured the way they are. In a direct listing, you won't have the same price stabilization offered by an IPO, and you won't be able to build out a book of long term investors. IPOs are risky and direct listings are even more so. Pros and cons to be weighed, likely at the expense of hiring an investment bank. 

There are intangible reasons why companies want to IPO - there is the mkt splash of the news, then from a banking perspective you get the support of banks research and S&T, which helps in distribution. This likely makes sense for some situations but I dont think the IPO is going away materially due to this change. 

I view this as a good thing, more competition will cause those that add no value to exit/flounder and existing players to up their game as this somewhat decentralizes/disintermediates the process. much like investors deserve choice rather than having to use expensive brokerage houses as gatekeepers, companies seeking capital should have more options as well

There is also the need to pay banks for putting out large revolver commitments at IPO..banks do that only knowing they'll get paid at IPO otherwise those are money loosing commitments. And every IPO'd Company needs a revolver.. 

Although it shrinks the total fee pool, it is probably a positive development overall.  Assuming that the SPAC market remains active, it gives potential issuers three paths to a listing (IPO, SPAC, direct listing). Issuers can weigh the pros and cons of each and pick what is best for their situation. 

Edit: fixed minor typo

Ha ha, yes, my mistake. 

This really only applies to the high-profile tech companies. There are requirements for a direct listing that 90% of companies fail. Most companies need the marketing/distribution of underwriters. 

If you want a fancy deck done, hire two consultants. If you want good advertising, hire an advertising firm. If you want to have your ass covered, hire a lawyer. Zero reason that ecm bankers get hired other than connections, and if you’re a high profile ipo, chances are in this market, you could get 3x subscribed with a business plan to light money on fire and sell the smoke (better plan than snowflake at least)