Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

What's Next For 2019's IPO Class?

What's Next For 2019's IPO Class?

The IPOs of 2019 like Uber UBER, Lyft LYFT, and Levi Strauss LEVI may not be out of the woods yet. The unicorn craze has crashed hard after many of this year’s market debuts have struggled to make any gains thus far. Highly anticipated IPOs like ridesharing companies Lyft and Uber are down 51.9% and 30.4%, respectively.

Furthermore, IPO filing mishaps like WeWork, who unraveled before their public offering, have made investors wary about the so called “unicorns” of 2019. As these struggling stocks continue through the end of their first calendar year, they inch closer to the end of lock-up periods as well, which could send stock prices downwards.

More Turbulent Times Ahead?

Lock-up periods are expiring for this year’s IPO class, which analysts say could introduce a new layer of pressure for young companies. Founders, employees, and some early private investors who bought in before a company goes public are usually restricted from selling for between 90 and 180 days. Uber, Pinterest PINS, and others are approaching that expiration date between mid-October and the end of the year.

The Bear Traps Report says roughly $31 billion worth of public company shares are unlocking from now until the end of this year. A sell off frenzy would be detrimental to the already struggling young companies and could also discourage other private companies from going public. If the early investors decide to sell simultaneously around the end of the lock-up period, then they would flood the market with shares, which would in turn weigh on stock prices.

DataTrek’s Nick Colas commented, “Venture capitalists are going to sell into lock ups because they have a huge investment in the assets and because their cost basis is so low — they still have a big gain even if the IPO hasn’t performed.” Essentially, venture capitalists just want to get their money back and move on to the next thing.

IPOs also face pressure from the employees who hold stock options, as they might hold a majority of their personal wealth in stock which would motivate them to sell. These IPOs who were valued as the next big thing by the private markets came under speculation once public market analysts did their due diligence. This was the case for WeWork as well as Uber who saw its shares fall over 7% in its market debut.

Is There Any Light at the End of the Tunnel?

Not all of this year’s IPOs have gone awry. Pinterest, Datadog DDOG, and Beyond Meat BYND have all made solid gains since their respective IPOs. One way companies are trying to avoid the lock-up issue is through direct listings.

Bill Gurley, partner at venture firm Benchmark, gathered hundreds of CEOs, CFOs, venture capitalists, and fund managers to an invite only event called “Direct Listings: A Simpler and Superior Alternative to the IPO.” This alternative allows buyers and sellers to meet up on the first day of trading and avoid the lock-in periods.

There were a lot of different factors that contributed to the less than spectacular performance from the IPO class of 2019. Macroeconomic uncertainty has forced investors to look for safe haven stocks rather than bet on startups who have yet to prove not only their profitability but durability as well.

The uncertainty surrounding whether or not these early investors will sell or keep their shares causes further volatility. Supporters of the direct listing method believe that the alternative helps a company find its financial equilibrium faster and avoids sell off frenzies that accompany uncertainty.

Airbnb, who is set to go public as soon as the first half of 2020, might do so via direct listing, which can potentially help the company find its footing in the public market. The potential emergence of direct listings could spell bad news for banks, as they collect hefty fees from companies for underwriting IPOs. However, time will tell how private market companies choose to conduct their public listings.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Massive Anti-Government Protests Erupt in Belgrade
Iran Executes Alleged Israeli Spies and Arrests Hundreds Amid Post-War Crackdown
Hungary's Prime Minister Criticizes NATO's Role in Ukraine
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Hungarian Scientist to Conduct 30 Research Experiments on the International Space Station
NATO Members Agree to 5% Defense Spending Target by 2035
NATO Leaders Endorse Plan for Increased Defence Spending
U.S. Crude Oil Prices Drop Below $65 Amid Market Volatility
International Astronaut Team Launched to Space Station
Macron and Merz: Europe must arm itself in an unstable world
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Iran Intensifies Crackdown on Alleged Mossad Operatives After Sabotage Claims
Trump Praises Iran’s ‘Very Weak’ Response After U.S. Strikes and Presses Israel to Pursue Peace
Oil Prices Set to Surge After US Strikes Iran
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
×