2019: The Year of the IPO
By Adithya Sanjay, Michigan PEVC Analyst
The global business ecosystem has been restless in anticipation of this year for too long now. 2019 is finally here, and the hype is very real. With multiple established unicorns expected to go public in the next few months, we are seeing its widespread effects already, including increased inflationary pressure on San Francisco’s housing market, as the city braces for a massive influx of wealth. As financial institutions double down on even bigger valuations, we analyze below the major incoming stock market players and their efforts to file IPOs before a potential economic downturn.
Uber
One of the most hotly anticipated IPOs, Uber has managed to create initial valuations as high as $120 billion. In fact, just recently, amid reports that SoftBank, Toyota, and other investors were in talks to invest over $1 billion in the Uber offshoot, the company’s autonomous vehicle division was valued above $10 billion itself. The numbers are staggering, and this will surely shake the stock market, assuming that valuations stay consistent with analysts’ predictions. That said, there have been many conflicting valuations, but how high Uber will soar will only be fully known when their S-1 is released to the public.
Lyft
The second biggest ridesharing business, Lyft, has arguably moved much faster than its competitor, Uber, to achieve its public filing earlier — expected as early as the end of this month. While the company is eyeing a valuation of about $25–30 billion, there is a lot of skepticism in Lyft’s prospects for success given the intrinsic unprofitability of the company. Although this is something that is known — of both Lyft and Uber — the net losses of $911 million that were posted in 2018 are markedly astonishing. The impact this will have on Lyft’s stock performance is yet to be seen.
Slack
Slack made headlines in 2015 as the fastest company to become a unicorn, reaching the $1 billion valuation milestone in just 8 months. A “collaboration hub for work,” the startup is taking a much different route to incorporating than the other companies here. Rather than filing for an IPO, Slack is pursuing a direct listing. In the more common IPO process, companies will hire financial underwriters to serve as intermediaries to raise capital and sell the stock to the public. Contrary to this, Slack plans to directly go public and have its insiders sell the stock without any liaisons. As such, the $7 billion company is entering the market with some uncertainty, both in terms of potential volatility and an unidentified market.
Pinterest was one of the latest tech startups to join the conversation, hiring Goldman Sachs and JP Morgan as underwriters officially at the end of February. The company is valued at about $12 billion, around the same valuation that Snap Inc. was at during its IPO. Pinterest has been performing quite strongly as of late, having posted $700 million in sales and a 50% increase in earnings from last year. That said, the company’s reliance on ads as its sole means of profit generation may be a point of concern looking forward to investors, considering the company may be frantically searching for alternative revenue streams in the case of a future economic downturn.
Palantir
A data mining and analytics firm, Palantir, has expressed the intention to go public in 2019 following 15 years of private operation. The company has been valued at up to $41 billion, poising to enter the market with a bang. Traditionally focused on government security, Palantir has refocused its strategy towards private companies ahead of its looming IPO. That said, similar to the other companies mentioned, Palantir has yet to reach profitability, something that is somewhat worrying considering its 15 year-long existence.
