Are investors cured of the IPO fever?
Watching the IPO marketplace the last two weeks has been like watching a game of dominoes.
In less than a week high tech fitness player Peloton's stock tumbled practically out of the box, Hollywood powerhouse, Endeavor canceled its plans to go public and today after a week of nothing but troubles which saw its CEO ousted and business units put up for sale, WeWork postponed it stock market plans indefinitely.
"I think we are already seeing the IPO market cool off a little bit. WeWork has postponed their IPO. SmileDirectClub and Peloton are down from their list prices," Brian Halmilton, founder of Hamilton IPO told FoxBusiness.com. "In particular, I think WeWork’s volatile valuation followed by the delay of its IPO may cause some companies to take pause."
Pause indeed.
New York magazine reported today that Google executives met with WeWork's marketing team in August to discuss an advertising buy for the then soon-to-go-public company. Google examined its search data on WeWork in advance of the meeting only to learn that WeWork had “the most alarming negative sentiment trends" the search giant had seen "compared to prior companies in similar situations.”
These come on the heels of two of the most anticipated IPOs of the year: rideshare start-ups Uber and Lyft. The former saw its shares slide more than 7% on the day of its IPO in May and since then and have fallen more than 30%. Meanwhile, rival Lyft listed its shares at $71 in April. The ride-hailing group's stock has plunged by about 40% since then.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| UBER | UBER TECHNOLOGIES INC. | 69.13 | -0.20 | -0.29% |
| LYFT | LYFT INC. | 16.57 | -0.73 | -4.22% |
Despite this unquestioned cooling, companies such as Airbnb plan a full-go with their public offering as will Postmates, now valued at $2.4 billion and fresh off a new round of private fundraising.
For "unicorn" companies -- investor and media darlings still building valuations to hopefully make it to the IPO market -- these recent developments are more troubling.
The Athletic – fresh off announcing an impressive 600,000 subscribers – hopes to go the IPO route one day. The subscription-based website, which offers an offbeat look at sports journalism, has seen solid growth and expansion over the past two years.
The current valuation for the site, which hopes to boast one million subscribers by the end of the year, is currently $300 million the sports media web site Awful Announcing reported utilizing information from the financial data company, Pitchbook.
Moving forward, IPO offerings will be viewed with a certain level of scrutiny in light of recent trends according to long-time IPO watcher Hamilton.
"The concern of an upcoming recession may be playing into this as well. This is the longest bull market we have seen. A lot of these companies have failed to show they are recession-proof, and when you combine that with a lack of profit, it doesn't bode well for Postmates and Airbnb," Hamilton said.
Disclosure: The author had previously written for The Athletic