Breakingviews - Figma IPO sketches case for direct listings
Figma sparked a frenzy by selling, opens new tab shares for $33 apiece on Wednesday after twice increasing its planned price range. By Thursday's end, they were trading for $115, giving the company a $56 billion valuation, nearly triple what rival Adobe was willing to pay for it in 2022. On Friday morning, the price hit $125.
This mania does little for Figma beyond raising its profile. Having generated, opens new tab more than $200 million of adjusted free cash in the year through March, the 13-year-old firm led by Dylan Field wasn't seeking to raise much money and only sold about a third of the 37 million shares on offer. The rest came from earlier backers such as Index Ventures and Kleiner Perkins.
Less than 8% of Figma's stock was available to investors who are, as ever, motivated by the fear of missing out on a fast-growing company. They ascribed a nonsensical valuation of 75 times last year's revenue. The biggest beneficiaries: financial advisers, including Morgan Stanley and Goldman Sachs, that were paid generous fees to sell the shares, and their clients who received early allocations and an immediate return.
Direct listings are better tailored for situations like Figma's. Used previously by Spotify Technology (SPOT.N), opens new tab and Palantir Technologies (PLTR.O), opens new tab, the process enables existing owners to sell straight onto an exchange with fewer restrictions. Market forces also determine the price instead of closed-door roadshows that cede such power to big fund managers and investment banks, whose incentives differ.
Although traditional IPOs make sense for many companies, well-capitalized brand-name ventures like financial plumbing provider Stripe are a growing breed. There are more than 1,200 firms worldwide with private valuations of at least $1 billion, according to research outfit CB Insights. Such unicorns, opens new tab increasingly go public so investors can cash out rather than to fund growth. And although the sample size is small, a dozen direct listings have generated, opens new tab a 42% five-year return on average compared to just 9% from thousands of IPOs spanning 1999 to 2021, per University of Florida finance professor Jay Ritter. Figma's buzz will inspire other founders to go public, but they would do well to be more creative.
Follow Jeffrey Goldfarb on X, opens new tab and Linkedin, opens new tab.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Independent
2 minutes ago
- The Independent
Democrats have early edge over Republicans in 2026 midterm election poll
A new poll shows finds that Democrats have an early edge heading into the 2026 midterm elections in the minority party's bid to wrest control of the House of Representatives back from Republicans. A YouGov/The Economist survey took place between August 1-4 and polled 1702 US adult citizens. The generic ballot is a barometer that shows just whether voters would prefer voting for a Democrat or Republican. As of this week, 43.7 percent of voters intend to vote for Democrats in the midterms and 38.4 percent prefer to vote for Republicans. The differences are even more pronounced when it comes to independent voters, as 38.2 percent said they intend to vote for Democrats while only 26 percent of them plan to vote for Republicans. Historically, the president's party loses at least one chamber in Congress during a midterm election, and flips some governorships or state legislatures. With the president off the ballot, voters register their satisfaction and dissatisfaction with the president's job performance at the midterms. The Economist/YouGov poll showed a majority of 55 percent of voters disapprove of President Donald Trump's job performance while 41 percent approve of it, with 12 percent of people who voted for Trump in 2024 disapproving of his job performance. Around the same time in 2017, 39.6 percent of voters planned to vote for the Democrats and 33.3 percent planned to vote for the Republicans. In 2018, Democrats would win back the the House of Representatives as they made a net gain of 40 seats. Democrats also have a significant advantage with young people. After young people, driven largely by young men, swung significantly to the right in 2024, 50.8 percent of voters younger than 30 said they intend to vote for Democrats, compared to only 21.8 percent who said they intend to vote for Republicans. Voters between 18 and 29 range disapprove of Trump's performance on the economy, with only 29 percent approving and 60 percent disapproving. They also do not approve of how he's handling inflation and prices, with 68 percent disapproving. Republicans also seem to be losing their grip on Hispanics voters, as 42.8 percent of Hispanic voters said that they intend to vote for Democrats. That's slightly lower than the 47.3 percent of Hispanic voters who said the same thing during the first week of August in 2017, which preceded huge Hispanic turnout in the 2018 midterm election, but still significant. Hispanic voters largely disapprove of Trump's performance on the economy, with 55 percent disapproving and only 38 percent approving. They are also not fans of his immigration policies, with 60 percent of Hispanic voters disapproving and only 35 percent approving. Trump has ramped up his attacks on Hispanics, particularly after he sent the US National Guard into Los Angeles without the consent of the state's Democratic Gov Gavin Newsom to quell protests against against Immigration and Customs Enforcement. Across the board, voters oppose his handling of health care, with 57 percent of voters disapproving of it. This comes a momth after Trump signed his signature 'One, Big, Beautiful Bill,' that included steep cuts to Medicare and Medicaid. Democrats hope to retake the House of Representatives next year. But Republicans hope to shore up their majorities. In Texas, Republicans elected to call a special session to redraw congressional lines in the middle of the decade, which prompted Democrats to decamp to blue states.
The Independent
2 minutes ago
- The Independent
Tips to help manage your buy now, pay later loans
Between rising prices and dwindling job growth, using 'buy now, pay later' on everything from concert tickets to fast food deliveries is becoming increasingly appealing. But greater use could also mean greater trouble, as more people fall behind on repaying these loans. Buy now, pay later loans gained popularity during the pandemic, especially among young people. While these loans can help you make large purchases without paying interest or undergoing a hard inquiry in your credit report, they can also easily be overused. About 4 in 10 Americans under the age of 45 say they've used "buy now, pay later″ services when spending on entertainment or restaurant meals, or when paying for essentials like groceries or medical care, according to a poll from The Associated Press-NORC Center for Public Affairs Research. Buy now, pay later loans were not previously reported to the three major credit reporting bureaus. But consumers will soon see the impact of buy now, pay later loans on their FICO credit scores. Whether you're a first-time or recurring user of buy now, pay later plans, here are some expert recommendations to use this tool responsibly. Focus on needs vs. wants Buy now, pay later plans divide purchases in monthly installments, typically in four payments. These loans are marketed as having low or no interest. Klarna, Afterpay, PayPal Later and Affirm are among the most popular buy now, pay later companies. These loans should ideally be used for large purchases or necessities, said Lauren Bringle, Accredited Financial Counselor at Self Financial. Bringle recommends asking yourself these questions before purchasing: Can I survive without this purchase right now? Do I need it for work, school, or a basic household need? Buy now, pay later is best used when you have a plan for the purchase, not for impulse buys. For example, when you need to buy a computer for school or a new refrigerator for your house, recommended Tyler Horn, head of planning at Origin, a budgeting app. Pause before purchasing Before deciding to take out a buy now, pay later loan, it's a good idea to pause and consider if it's the best financial decision for you, recommended Erika Rasure, Chief Financial Wellness advisor for Beyond Finance. Buy now, pay later plans can be positive budgeting tools when used strategically. However, it's essential you know your spending behaviors before using them, said Rasure. If you're an emotional spender, it might be hard for you to moderate your use of this tool and you could end up adding to your financial stress. 'Buy now, pay later can become a coping mechanism rather than a financial tool that can get you a good deal or improve your cash flow,' said Rasure. If you have other payments due, such as credit card or student loan payments, consider how a buy now, pay later loan will add to your monthly payments, recommended Sarah Rathner, Senior Writer for NerdWallet. Read the fine print Like credit cards, each buy now, pay later loan has terms and conditions that can vary by purchase and providers. It's crucial that you know what you're agreeing to before you sign up, recommended Michael Savino, Chief Lending Officer at Municipal Credit Union. 'Always read the fine print. Understand fees, repayment schedules, and what happens if you miss a payment or go into default,' said Savino. In general, if you miss a buy now, pay later payment, you can face fees, interest, or the possibility of being banned from using the services in the future. Avoid stacking BNPL loans You can easily run into difficulty keeping up with the cost and schedule of your repayments if you're trying to simultaneously pay off two, three or more loans, Savino said. 'Juggling multiple plans creates a blind spot and overall debt load, and multiple repayment dates are hard to manage,' Savino said. "So more loans makes it more difficult to budget.' The best approach: Stay mindful of your overall spending, and limit the number of buy now, pay later loans. Keep track of your loan(s) Whether or not you're paying for multiple buy now, pay later purchases at once, you want to be aware of where your money is going at any given time, recommended Courtney Alev, consumer advocate at Credit Karma. 'Buy now, pay later often requires automatic payments, so you want to make sure that your account is funded so that those payments are processing successfully,' recommended Jennifer Seitz, director of education at Greenlight, a financial literacy app for families. There are many ways to track your loan payments — from setting a reminder on your calendar, to creating an intricate excel spreadsheet or tracking them on an app, said Jesse Mecham, founder of the budgeting app YNAB. Finding the best method that works for you will help you stay on track and avoid late fees. Make buy now, pay later work for you For shoppers with low credit scores or no credit history, buy now, pay later loans can seem like the best, if not the only, loan option. If used moderately and responsibly, these short-term loans can be a positive lending exercise, said Savino. 'It allows you to to establish a baseline (and) get access to other affordable credit options that you can leverage that will ultimately provide financial wellness,' he added. Still, NerdWallet's Rathner emphasized that shoppers using these tools always remember that buy now, pay later is a form of borrowing money. 'It just kind of feels like you're given a little extra time to pay back," Rathner said. "But the reality is, if you miss payments, it can hurt your credit, much like missing payments with any other loan.' —— The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
Daily Mail
3 minutes ago
- Daily Mail
Portland removes all speed cameras for newer models
A progressive city in Oregon has removed all of its speed cameras - but plans for them to be replaced with upgraded models. Portland 's 32 speed cameras will be replaced with double the number of the newer models as city leaders emphasize their effectiveness in high-crash areas. On Monday the Portland Police Bureau and the Bureau of Transportation announced a new contract with Novoa Global. 'The city has been working with a contract that's been problematic. They're getting a new contractor that's going to be good,' Portland City Councilor Steve Novick told KOIN . 'I talked to the head of Multnomah County Courts the other day and they said that there's ways that they can expand their capacity to handle more processing, more speeding and red light camera violations.' The new contractor will be the only supplier and operator of speed cameras, with plans to have the replacements in place 2 by November 1, according to a press release. '[Novoa Global's] comprehensive traffic safety solutions - including red light, speed, and school zone speed enforcement - offer turnkey programs to help combat the ongoing crisis of traffic-related injuries and fatalities,' the release said. The city council has hopes to increase the number of speed cameras to 64 within the next few years, with three more locations in the coming months. Novick is one of the supporting city council members pushing to increase the cameras monitoring red lights and speed. 'New York City has 3,000 of these things. Based on road miles, I think we should have 1,000,' Novick told Willamette Week , saying doubling the city's cameras in three years 'seems like a glacial pace.' The council member emphasized the effectiveness of the cameras at reducing speed and curbing traffic related deaths. Council Vice President Tiffany Koyama Lane's resolution to create a Vision Zero Task Force intended to 'support the goal of zero traffic deaths and evaluate and report to council on advancement to those goals annually.' 'In the first six months of our city council there haven't been a lot of opportunities to work specifically... on projects such as fixed speed traffic cameras,' said Koyama Lane according to a report by WW.
