- Investors expect 2019 to turn into a hectic year for initial public offerings as technology unicorns and decacorns like Uber, Slack, and Pinterest are expected to hit the public market.
- When Lyft priced its IPO last week at $US72 a share, it was valued at around $US24 billion. Its chief rival, Uber, is expected to go public at a $US120 billion valuation later this year.
- Some analysts are having a hard time assessing Lyft’s true value since it’s the first of its kind on a public exchange, facing various risks as it lost hundreds of millions of dollars in 2018.
- Markets Insider has compiled a list of other high-profile IPOs and their valuations – from the dot-com era and into the future
- Visit Markets Insider’s homepage for more stories.
This year is expected to turn up a shiny freshman class of high-profile public technology companies, from Uber and Slack, to Airbnb and Pinterest.
Lyft kicked off the wave of unicorn offerings last week, going public at a valuation of around $US24 billion, after a bit of a slow start to the year for listings due to the partial federal government shutdown.
The unicorns, or companies valued at $US1 billion or more, next in line to debut carry massive valuations. Uber is expected to fetch a valuation of around $US120 billion, Palantir $US41 billion, and Airbnb $US31 billion. Slack, which has announced it will go public through a direct listing, was most recently valued at $US7 billion, and Pinterest, which officially filed its S-1 with the Securities and Exchange Commission last month, is worth about $US12.3 billion.
But assessing a company’s worth in the private and public markets are two very different animals. Some young technology firms like Lyft are not yet profitable – a trait not uncommon among startups – making it difficult to assess their earnings history. And other “disruptor”-type companies like Airbnb are the first of their kind to list on the public market, making comparisons tough.
Some Wall Street analysts who cover Lyft say it’s a tall task to properly value the ride-hailing company since so many fundamental unknowns still surround it: How will it achieve profitability? How would Lyft fare in an economic downturn? How will its rival Uber affect its business?
“In our view, valuation is the toughest task with LYFT,” Michael Ward, an analyst at Seaport Global Securities, wrote to clients this week. “While we believe the ridesharing market will continue to grow and expect LYFT to be a prime competitor, in our view, current valuations reflect an overly optimistic view of consumer behaviour in the US.”
To compare Lyft’s current valuation with the technology giants of yore, Markets Insider has compiled the valuations, annual revenue, and price-to-sales ratios of some of the more popular tech IPOs over the last two decades. A portion of the data in the slides below is from a recent report distributed by Daniel Morgan, a portfolio manager with Synovus Trust Company.
His conclusion from analysing the price-to-sales ratios of companies like Netscape, Yahoo, and eBay is that the valuations of some of today’s unicorn valuations pale in comparison.
Morgan told clients that the valuations of recent unicorns “appear extremely low compared to the ‘Go-Go’ Days in Technology investing from 1995-1999, before the Tech Bubble Burst, when companies like Yahoo and Netscape went public at ‘Monster Size’ multiples of 238x and 171x Revenues!!!”
See how the popular tech IPOs compare.
Of the companies analysed, Morgan disclosed Synovus Trust Company owns shares in Facebook, Amazon, Alibaba, and Twitter. Morgan personally owns shares of Facebook and Amazon.
IPO date: March 29, 2019
IPO value: $US24 billion
Revenue: $US2.2 billion
Price-to-sales ratio: 11.4x
Expected IPO date: April 2019
Estimated IPO value: $US120 billion
2018 revenue: $US11.3 billion, the company said earlier this year.
Price-to-sales ratio: 10.5x
Expected IPO date: 2019. Pinterest filed its S-1 with the Securities and Exchange Commission in March.
Estimated IPO value: $US12.3 billion, according to a Wall Street Journal analysis of Pinterest’s S-1.
Revenue: $US755.9 million
Price-to-sales ratio: 16.3x
Expected IPO date: 2019, but the co-founder said in comments to Business Insider in March that it may not go public this year.
Estimated IPO value: $US31 billion
Estimated revenue: $US2.76 billion
Price-to-sales ratio: 11.2x
Expected direct listing date: The first half of 2019, according to The Wall Street Journal, citing people familiar with the company’s plans. Slack confidentially filed its S-1 with the Securities and Exchange Commission in February.
Estimated direct listing value:
Slack was most recently valued at $US7 billion
Estimated revenue: $US221 million
Price-to-sales ratio: 45.3x
Expected IPO date: As soon as the second half of 2019, according to The Wall Street Journal, citing people familiar with the matter.
Estimated IPO value: $US41 billion
Estimated revenue: $US750 million
Price-to-sales ratio: 54.6x
IPO date: March 1, 2017
IPO value: $US24 billion
Revenue: $US404.5 million
Price-to-sales ratio: 59.3x
IPO date: September 18, 2014
IPO value: $US168 billion
Revenue: $US8.44 billion
Price-to-sales ratio: 19.9x
IPO date: November 6, 2013
IPO value: $US14.2 billion
Revenue: $US639.8 million
Price-to-sales ratio: 22.2x
IPO date: May 17, 2012
IPO value: $US104 billion
Revenue: $US3.711 billion
Price-to-sales ratio: 28x
IPO date: September 23, 1998
IPO value: $US715 million
Revenue: $US14.922 million
Price-to-sales ratio: 47.9x
IPO date: May 14, 1997
IPO value: $US413 million
Revenue: $US15.75 million
Price-to-sales ratio: 26.2x
IPO date: April 11, 1996
IPO value: $US334 million
Revenue: $US1.41 million
Price-to-sales ratio: 238.6x
IPO date: August 8, 1995
IPO value: $US927 million
Revenue: $US5.4 million
Price-to-sales ratio: 171.6x
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