The 2019 season of the Initial Public Offering (IPO) was, perhaps, one of the most anticipated in years. As this bull market continues to expand, many analysts compare the current situation with 1999, the year in which public offers from technology companies peaked – just before the dotcom bubble burst.
Of course, given that the US markets are high at all times, it makes sense that companies interested in raising capital through public markets are currently moving forward. But for all the frenzy, not every long-awaited IPO was a great performer. Of the seven high profile offers that have taken place so far in 2019, some achieved impressive returns, but many lagged behind or even produced negative returns.
Using standard school report reporting cards, where A + is excellent and F is a total failure, we have ranked seven of the most announced offers this year. In our next post we will take a look at the major IPOs that are expected in the second half of the year.
1. Beyond Meat: A +
Performance of IPO prices: + 526%
Performance of the first transaction: + 240%
BYND Daily since IPO
Beyond Meat (NASDAQ :), the manufacturer of vegetable meat substitutes has undoubtedly been the most popular IPO to date this year. Trading started on May 2.
Since then, the stock has experienced amazing growth. More importantly, the muscle twitches were helped by a good story that was already in place at the company. By ensuring highly transparent partnerships with fast food chains, such as the private Carl & # 39; s Jr. and adapting to the cultural trend of avoiding meat, the company was able to generate excitement among investors about its prospects.
A strong growth story combined with a powerful story is a guaranteed recipe for an explosive stock momentum. Beyond Meat is now traded at almost 100 times the annual turnover, so its valuation is based on long-term expectations rather than solid foundations.
2. Zoom video communication: A
Performance of IPO prizes: + 152%
Performance from first trade: + 39%
ZM Daily since IPO
Zoom & # 39; s (NASDAQ 🙂 ascension, since it became public on April 8, was so fast that it even kept the CEO from doing so.
The appreciation for this video conferencing tool, however, is determined by two important factors: it has more than doubled its revenue last year and the company is already profitable. In the current climate, where many IPOs of technology companies are focused on growth at the expense of direct income, the ability of Zoom to deliver both has been rewarded by investors.
3. Pinterest: B
Performance of IPO prices: + 41%
Performance of the first transaction: + 13%
Our pre-IPO evaluation: neutral
PINS daily since IPO
Although Pinterest (NYSE 🙂 took off after the IPO of April 18, the social media network that allows users to display messages on their personal creative signs has been back on Earth ever since. The early rise was due to investor hopes that the company would soon be profitable, but the first on May 16 drove the shares to a more reasonable valuation, doubting when the company would actually achieve profitability.
Yet it can be said that Pinterest is the only high-expectations IPO that has proven itself well for private investors. Although we remain neutral in the future with regard to Pinterest's outlook, the current price of the share reflects potential monetization, taking into account the fact that profitability may not come until later, in 2020.
4. Levi Strauss: C
Performance of IPO prices: + 36%
Performance from first trade: + 4%
LEVI Daily since IPO
Legendary jeans manufacturer Levi Strauss (NYSE :), which was listed on the stock exchange on March 21, should actually have two figures based on when an investor could acquire his shares. For those who were able to access at the IPO price, it scores an A; unfortunately for the less privileged, it gets a D -.
Because most people did not have access to the IPO price, we have on average ranked to a C. Levi Strauss is a solid company with growing but not explosive revenues. It has a significant amount of debt ($ 1.2 billion on a net TTM income of $ 448M) and it faces strong competition from the sportswear industry, including competitors such as Nike (NYSE 🙂 and Adidas (OTC 🙂 among others.
These factors are the reason for the poor performance of the shares so far. Although LEVI is a solid company, we see no immediate foundations that would improve its course.
5. Slack Technologies: C-
Performance of IPO prices: + 34%
Performance from first trade: -9%
Our pre-IPO evaluation: overvalued
Slack Daily since IPO
Like Levi Strauss, the return on Slack (NYSE 🙂 depends on whether someone had access to the IPO prize. Slack shares, which started trading on June 20, are only available for three weeks, so there is little left to say about the company at this time. The first income report as a listed company is only in October.
We know, however, that the business messaging tool trades transactions at 30 times the expected revenue for the full 2020 budget, and that revenue growth is expected to slow from 67% in Q1 to 52% in Q2. Only for these statistics does Slack appear to be a risky investment.
6. Uber Technologies: D
Performance of IPO prices: -4%
First trade performance: + 2%
Our pre-IPO evaluation: overvalued
UBER Daily since IPO
Ride that greets unicorn Uber (NYSE 🙂 was so far the most disappointing IPO of the season by many. At one point, the anticipation for this offer was so high that many expected it to be public with a value of $ 120 billion dollars.
Unfortunately, the company had to repeatedly lower its expectations for its IPO on 10 May. It is currently trading against a disappointing market capitalization of & # 39; only & # 39; $ 73 billion.
Concerns about the path to profitability, along with highly published conflicts with drivers were central during the first trading days, and the stock fell by no less than 20% of the IPO valuation before it clawed its way back. Until Uber demonstrates that it can earn real money, there is no reason to believe that investors will treat it differently than it has so far.
7. Lyft: F
Performance of IPO price: -17%
Performance of the first transaction: -32%
Our pre-IPO evaluation: overvalued
LYFT Everyday since IPO
Lyft (NASDAQ 🙂 has the dubious distinction that it is the only party tent this year to have given a negative return to every investor participating in the public offering on March 29. It alone deserves an F, but it is now particularly disgraceful, as the broader market had its best six-month performance in two decades.
The excitement around the IPO of the rhythm-making company – the first large offer from the insurers caused by the year to over-price the IPO. However, markets did not buy it. They still are not. We continue to believe that Lyft & # 39; s lack of income and riders do not justify his current rating.
Although stock markets continue to rise, we would argue that calls to compare this current environment with 1999 are incorrect. Market participants in 2019 generally had reasonable responses to recent offers, while they were not afraid of punishing stingy insurers, as in the case of Lyft.
Yet almost all the IPOs that took place during the first half are expensive, but that is also the general market.