Ready or Not, we are a go for launch? The year started with much anticipation for high-profile companies like Uber, Lyft, Pinterest, Beyond Meat and Slack to join the market.
Although not always the most easy way, the Initial Public Offering (IPO) has been a great way to capitalise on the movement of a share when a company goes to market. Confidence runs high, investors participate in driving prices higher, and all is good in the world.
So, is this still the case?
Let’s take a closer look at some of the companies that have already had their Initial Public Offerings and how they are performing since then.
Uber has been one of the much-anticipated new entrants to the market place in 2019 when it listed back in May after a stellar $82 Billion valuation week. It has not been a storybook start for the multinational transportation company, currently trading 26.70% lower following its debut.
Market conditions have not been favourable to say the least, Uber’s record losses, layoffs, scrutiny over passenger safety have seen its share price under pressure which might continue.
Moving forward Uber has some great prospects for the future, and recently added new features to its offering. Uber wants to be the "operating system for everyday life", a slogan coined by CEO Dara Khosrowshahi at their latest press event, which might give us a glimpse of what’s to come.
Source - Bloomberg
Today, Slack’s share price is a far cry from its record first day performance. It seems that investor sentiments have shifted from a couple of months back. Tech IPOs were the flavour of the month, and now, not so much. Slack’s share price has been “slacking off" after its first earnings release as a public company.
Earnings and revenue beat analysts’ expectations, but weak guidance and concerns over its ability to compete with Microsoft’s Teams app is driving the share price lower.
Currently 38.56% down from its direct listing all is not lost, the projected growth for Slack over the next 10 years if they can capture at least 15% market share. This could see the share price triple from the share price we see today if Morgan Stanley’s analysis is anything to go by. Morningstar Investment Research on the other hand think investors should wait on the sidelines with a target price of $14 per share.
Source - Bloomberg
Faux meat is still the clear winner of the IPO offerings and is firmly holding on to its 126.04% gain since its Initial Public Offering (IPO). The company’s valuation has been placed into question recently by the Wall Street firm DA Davidson, having been given its second ever sell rating by one of the firm’s analysts. All of this happening just as the McDonald's Corporation (MCD) announced a 12-week pilot program using a Beyond Meat patty across 28 restaurants in Ontario.
This news saw the share price gain over 10% but some believe there are better offerings in the sustainable foods sector like The Kellogg Company (K) and Tyson Foods Inc. (TSN).
Source - Bloomberg
Initial Public Offerings are down 25% from last year primarily due to the global economic outlook and have attracted some bad publicity of late. Especially with the whole WeWork debacle that have no seen the much-anticipated IPO been withdrawn.
Initial Public Offerings are an exciting market to watch and to take note of especially in times of economic growth.
Sources – KOYFIN, Investopedia, Businessinsider, Forbes, Barrons, CNN
*Stock prices taken on 01/10/2019
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Barry is a market analyst with GT247, with a wealth of experience in the investment markets. Now in his tenth year in the markets, Barry "The Beef" Dumas brings a combination of technical analysis and fundamental insights to the table.