- More than 100 tech unicorns could go public in 2019, according to UBS.
- UBS said investors should buckle up for a long ride if they want to see major returns.
- Big-name unicorns preparing for IPOs include Uber and Pinterest,
More than 100 tech unicorns – privately-funded startups with a market value of $US1 billion – could go public in 2019, according to an analyst note by Swiss investment bank UBS.
Citing figures from CB Insights, UBS said there are 162 companies in the US that qualify as unicorns, while there a further 171 internationally. Together, the 333 firms have a combined valuation of more than $US1 trillion, UBS said.
Although it did not speculate which of this crop of startups will IPO, it listed a number of companies that have announced plans to go public, including Uber and Pinterest.
UBS said market conditions will need “stay favourable” for the “year of the unicorn” to become a reality, but investors should buckle up for a long ride if they want to see major returns.
“The deciding factor will be whether these companies actually live up to expectations, which won’t be determined on the first trading day. As a result, we believe this year in IPOs is more likely to be a slow burn than a hot market,” it said.
If this year’s IPO market did turn out to be hot, UBS said comparisons would be made with the 1990s dotcom era. However, it added that there are “important differences between the dotcom era and today in terms of company attributes and investor euphoria,” which should lead to “a more benign outcome” than the dotcom era’s infamous crash.
At least one big-name unicorn has already gone public this year. On March 28, Lyft became the first ride-hailing company to go public, with shares initially priced at $US72 each. It closed at $US68.97 on Tuesday.
Uber, Lyft’s ride-hailing rival, is preparing for an IPO, with some reports suggesting it could go public as early as this month. Airbnb, the online hospitality service, could reportedly go public as soon as June.
Pinterest, the social media platform, filed to go public in March, while Slack, the cloud-based collaboration company, is reportedly preparing to go public through a direct listing, rather than a traditional IPO.
The UBS report comes after 2018 saw an IPO boom, in which there were more IPOs in the first three quarters of 2018 than in all of 2017. A particularly noticeable trend was biotech companies going public, with 58 biotech firms having launched IPOs by mid-September 2018.
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