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Data analytics firm Palantir Technologies Inc. and work management software company Asana Inc. saw their stock prices rise in their public debuts on the New York Stock Exchange Wednesday.

The companies both opted for a direct listing, which removes the investment banker underwriters from the equation. With a direct listing, there is no matching of buyers and sellers the night before as happens in a traditional initial public offering. Instead, the company’s employees and early shareholders list their existing shares for sale directly on the exchange.

The direct listing model is rare, but it has been done by Spotify Technology SA in 2018 and Slack Technologies Inc. in 2019.

The largest of today’s stock market entrants is Palantir, which was founded in 2003 by venture capitalist Peter Thiel and sells software that organizations use to integrate data, decisions and business operations into a single platform. Palantir’s software, which is used by several government intelligence agencies around the world, enables users to answer complex questions quickly by bringing the right data to the people who need it.

Asana sells a work management platform that’s used by teams to organize tasks in a centralized visual dashboard to improve coordination among workers. The company was founded in 2009 and its software is available as a freemium service, wherein the most basic features are free to use but more advanced tools must be paid for. The company claims that its platform has more than 1 million users, with about 50,000 of them paying for the advanced features.

The New York Stock Exchange said today that Palantir’s stock will have a reference price of $7.25 per share, while Asana will be listed at $21 per share.

Update: Palantir’s shares opened at $10 a share, rising afterwards to more than $11 a share. The initial price gave Palantir a market capitalization of about $16.5 billion, somewhat below its $20 billion private valuation, though that valuation could rise as stock options and other restricted stock units vest into common stock.

Meanwhile, Asana’s shares opened at $27, above the $21 reference price announced by the New York Stock Exchange Tuesday night. The opening price gives Asana a market cap of about $4.2 billion.

The reference price in a direct listing can be thought of as a placeholder that’s based on recent private market transactions. It’s essentially just a guide to investors, with the real value of the shares likely to emerge once the market opens tomorrow.

Analyst Holger Mueller of Constellation Research Inc. told SiliconANGLE the direct listing method is appealing because it gives the company’s executives more control over their IPO, which traditionally is in the hands of the underwriters.

“We will see how well it serves Palantir and Asana,” he said. “Both have proven business models that investors like, as opposed to the consumer-related Spotify and one-trick pony concerns around Slack.”

Palantir is coming to the market late. It was originally scheduled to debut on Sept. 21 but pushed its listing back by a week because of some protracted negotiations with the Securities and Exchange Commission, according to the Wall Street Journal’s sources.

Charles King of Pund-IT Inc. told SiliconANGLE is an unusual company thanks to its ties with the U.S. government and its intelligence agencies, and noted that it has failed to turn a profit during its 17 years of existence, even though its main client is renowned for being a profligate spender.

“The direct listing model is one that can be especially beneficial to founders, vested employee shareholders, and early investors,” King said. “That makes Palantir’s listing especially important to them, but I expect many traditional investors will consider it highly speculative, especially given the company’s close ties to the current U.S. administration.”

Both companies have hired Morgan Stanley as their chief adviser, with Citadel Securities LLC acting as their designated market maker to help oversee the listing. They would seem to be a good choice, as they previously helped Spotify and Slack with their direct listings.

The Journal said that Palantir’s bankers have told investors they expect its stock to begin trading at around $10 per share, which would value the company at about $22 billion. Meanwhile, Asana’s market capitalization was expected to be smaller, about $5 billion to $6 billion, the Journal said.

Palantir and Asana are making their public debuts at a lively time when investors have shown a voracious appetite for new tech stocks. It has been an extraordinarily busy few weeks for IPOs, with the likes of Snowflake Computing Inc. raising almost $4 billion at a $33 billion valuation. That was followed by similar strong debuts from Sumo Logic Inc. and Unity Software Inc.

With reporting from Robert Hof

Image: AhmadArdity/Pixabay