- The performance of 2019’s initial-public-offering class has been mixed, with returns ranging from negative to triple digits.
- N on-tech IPOs have performed strongly while tech unicorns have seen mixed results.
- Several more unicorns are mulling IPOs in 2019, which will test the market’s appetite for IPOs.
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It has been a particularly active year for mega initial public offerings, with four companies, including Uber and Lyft, raising more than $US1 billion.
While tech unicorns, or tech companies with private valuations north of $US1 billion, were responsible for most of 2019’s high-profile initial public offering, other sectors were also represented. These include share offerings for companies as like Levi’s and Beyond Meat, which has been the top-performing IPO of 2019.
As of Tuesday’s close, Beyond Meat had gained 244% since its May 1 IPO, while Uber and Lyft, the two most-anticipated debuts of they year, have left investors in the red with losses of 9% and 21%, respectively.
Lead underwriter Morgan Stanley blamed the poor performance of Uber’s IPO on the recent stock-market volatility. The ride-sharing giant went public on a day where renewed trade tensions caused the Dow to fall as much as 700 points. Shares of the company fell 8% on their first day of trading, and have not yet recovered.
CNBC reported that Morgan Stanley employed the rare tactic of naked short selling to support Uber’s IPO. This involved the bankers selling more shares than what was allotted in the IPO, and then buying them back as effective “support” in the open market. Morgan Stanley and Uber declined to comment on the report.
Other unicorns expected to go public this year include Slack, Casper, and WeWork.
In a further test of the market for public issuances, Alibaba has recently announced plans to raise up to $US20 billion of capital through a Hong Kong listing while SoftBank has floated the idea of listing its gargantuan Vision Fund at a valuation north of $US100 billion.
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