What's going on?

Slack, the American workplace messaging service, listed on the US stock market on Thursday via a direct listing � cutting out the investment banks which would normally manage the sale of new shares. There wasn�t much slack in the stock price, however: it immediately jumped 50%.

What does this mean?

A direct listing is cheaper than an initial public offering (IPO) because companies avoid most of the fees typically paid to investment banks for organizing and marketing their public debut. It�s pretty rare � but one reason companies like Swedish music streamer Spotify do it is to enable employees to sell stock whenever they want, without the mandatory holding period after listing (a.k.a. �lockup�) that�s usually the case with an IPO.

But direct listings come with risk: unlike an IPO, there are no investment banks committed to buying the company�s shares at a certain price if investor demand is weak. Without that backstop, initial trading in Slack�s shares could be very volatile.

Why should I care?

For markets: There may be trouble ahead.

Investors� appetite for Slack shares may have been helped by the US central bank�s Wednesday acknowledgement of growing pressure to lower interest rates in 2019 � thereby making stocks a more attractive buying proposition (tweet this). Of course, Slack isn�t selling new shares to raise money like companies usually do when they �go public� � but with stiff competition from Microsoft, Google, and Facebook, its bank balance of $300 million might need topping up in order to keep ahead of rivals� workplace �productivity� software.

The bigger picture: Tech disruption tends to cut out middlemen.

Big startups have revolutionized industries, cutting out middlemen. While Uber ultimately followed a more traditional IPO route this year, it�s perhaps no surprise that Slack went a step further by cutting out financier middlemen too. Spotify�s stock has fallen 10% since listing, however � and other firms mulling a direct listing will be keeping an eye on Slack�s performance.