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The IPO engine has sputtered back to life, but who's going public? A look at the companies that have publicly listed so far in 2019

IPOTechVCLyftPagerDutyZoomBeyond MeatUberFastlyCrowdStrikeSlackWeWork

Risun Udawatta   June 13, 2019

 



2019 has been an eventful year for initial public offerings (IPO). For almost two decades, the market has experienced a drought of tech IPOs, during which companies have chosen to stay private for much longer than in the past. However, with this year nearly halfway over, eight high-profile tech companies have already gone public in one of the most anticipated IPO seasons in the last several years. Despite the mixed bag of post-IPO trading performance, more highly valued startups are expected to publicly list later this year.


Why Have Companies Stayed Private for Longer?

 

Source: Jay Ritter, Professor at University of Florida

There’s been a paradigm shift in the public and private markets. The Dot Com Bubble caused tech IPOs to slow to a crawl, as investors became skittish of the viability of certain tech business models and sky-high valuations. While tech IPOs began to see a slight recovery starting in 2004, the Great Recession in 2008 stomped all hopes of a recovering IPO market. Subsequently, an amalgamation of factors, including a policy of easy money and a long economic recovery, caused an environment where investors sought returns elsewhere. Easy Money was a policy by the Federal Reserve that reduced the federal funds rate to nearly zero and thereby reducing interest rates for the U.S. markets. Many investors turned to the private equity and venture capital (VC) space, creating an environment where startups have been able to easily raise venture funding, often in hundred-million-dollar increments. As a result, startups found that they no longer needed to raise public equity via the traditional IPO process, which was typical in the Dot Com era. With this trend, companies have also forgone other complexities and challenges associated with being a public company – e.g., complying with Sarbanes-Oxley and other SEC reporting requirements and dealing with Wall Street analysts and short-term market expectations.

So Why Has 2019 Brought So Many Large IPOs?

Long story short, VC investors and employees became impatient and wanted liquidity (we note that the explanation is a bit more complicated than that but it is outside the scope of this blog post). Capital has continued to flow into startups, sustaining the trend to stay private longer, but the market has hit a point where more investors are pushing for a liquidity event. In the Dot Com era, startups stayed private between three and five years on average (e.g., Amazon and eBay). Today, companies are staying private for longer, exemplified by PagerDuty and Uber, both of which were private for ten years. As a result, the original VC model has been upended. VC firms that may have had a more typical five-year hold period are now often required to wait over ten years to realize a return. Consequently, more startups are now moving to the public markets in part due to investor pressure.

Which Major Tech Companies Have Gone Public So Far This Year?

A wide range of large tech companies have gone public this year, from tech darlings like Lyft and Uber to less publicly known companies like Zoom and Fastly that have rocketed in the public markets. Without further ado, below is a summary overview of these companies and their IPO performance to date. (Market data based on 6/12/2019)

Lyft (Nasdaq:LYFT)


IPO Date
3/29/2019
Offering Price
Current Price
$58.41 (18.88% discount to IPO)
IPO Commentary
 
Lyft’s public debut has been less than ideal. After increasing its price range due to IPO roadshow demand, the stock price quickly dropped below its offering price due to profitability concerns and shareholder lawsuits. Subsequently, the company missed Wall Street’s earnings expectations, further contributing to its share price fall.
 



PagerDuty (NYSE:PD)

 

IPO Date
4/11/2019
Offering Price
$24.00
Current Price
$55.31 (130.46% premium to IPO)
IPO Commentary
 
PagerDuty went public after pricing its IPO higher than its revised pricing range, signaling the strong demand for SaaS companies (despite having negative earnings). The company debuted to a healthy IPO pop and beat Wall Street’s Q1 expectations.
 



Zoom Video Communications (Nasdaq:ZM)

 

IPO Date
4/18/2019
Offering Price
Current Price
$102.77 (185.47% premium to IPO)
IPO Commentary
 
Zoom’s IPO has been a success by all metrics. Zoom’s IPO pop showed the demand for profitable SaaS companies, during a time where many startups are still prioritizing growth at all cost. Additionally, the company continued to impress the markets with a strong earnings update in Q1 2019.
 



Beyond Meat (Nasdaq:BYND)

 

IPO Date
5/2/2019
Offering Price
Current Price
$141.97 (467.88% premium to IPO)
IPO Commentary
 
Beyond Meat took the slow and steady route to the public markets. After publicly filing IPO paperwork in November 2018, the company waited until the market was primed for startups. Beyond Meat’s approach ultimately paid off and popped 163% on its first day based on closing price, speaking to the investor demand for meat alternatives.
 



Uber (NYSE:UBER)

 

IPO Date
5/10/2019
Offering Price
Current Price
$42.17 (6.29% discount to IPO)
IPO Commentary
 
Uber tried to not repeat the mistakes of Lyft and took a more measured approach, pricing its IPO at a lower than expected valuation. Ultimately though, Uber’s tactics didn’t prevail, and Uber’s stock opened lower than its offering price, due to the complexity of its business model and (of course) profitability concerns. Despite Uber’s well received earnings announcement, the company has struggled to maintain a stock price above its IPO price.
 



Fastly (NYSE:FSLY)

 

IPO Date
5/17/2019
Offering Price
$16.00
Current Price
$20.64 (29% premium to IPO)
IPO Commentary
 
Despite coming off the heels of Uber’s rocky IPO, Fastly illustrated the demand for IaaS and content delivery services startups. Additionally, Fastly continued the successful IPO streak for B2B-focused startups like PagerDuty and Zoom.
 



CrowdStrike (Nasdaq:CRWD)


IPO Date
6/12/2019
Offering Price
$34.00
Current Price
$58.00 (70% premium to IPO)
IPO Commentary
 
In another highly anticipated IPO, CrowdStrike took a bullish approach and priced its offering above its updated pricing range due to IPO roadshow demand. Based on first day trading, CrowdStrike’s strategy seems to have paid off, closing 70% higher than its offering price.
 


Who’s on the docket to go public next?

Despite the mixed bag of post-IPO performance, startups are continuing to take concrete steps towards the public markets. Below is a list of companies that may go public still this year:

 
Slack Technologies (NYSE:WORK)
 
Slack publicly filed its S-1 on April 26, 2019 indicating that it will be pursuing a direct listing. The company is expected to begin trading on June 20.
 
 
WeWork announced on April 29, 2019 that it confidentially filed IPO paperwork with the SEC. WeWork’s IPO has already had a mixed reaction, with most criticism arising from its unprofitability and industry concerns.
 
 
Peloton, an exercise content and equipment company, confidentially filed its IPO paperwork on June 5, 2019. With consumer IPOs off to a rocky start this year, Peloton will need to convince investors its subscription and equipment sales business model warrants a successful public debut.