Business

Uber IPO may have flopped, but some unicorns are alive and well




Multi-billion dollar startup that has raised money from Silicon Valley and other venture capital investors around the world has struggled as they graduated from hot private companies to listed stock on Wall Street.

The market is about to enter the IPO doldrums for a bit, without major offers expected for Slack's direct listing in June.

But the last weakness is not necessarily a bad sign on Slack – or Airbnb, WeWork or other high-profile private unicorn companies that are expected to consider IPOs later this year or 2020.

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It may seem that investors no longer have an appetite for unicorns – unless they sell plant-based foods. Beyond Meat ( BYND ) continues to soar. The stock rose 7% Thursday to nearly $ 105 per share and has more than quadrupled from the offer price.

But dig deeper and you will find that several other recent IPOs have also done well beyond Beyond Meat. They just can't generate so many headlines, partly because they cater more to large corporate customers instead of average consumers.

For example, shares of web conferencing platform Zoom Video ( ZM ) PagerDuty ( PD ]] which was published each time in April, has more than doubled from the offer prices.

It is no surprise to see less well-known software companies thrive as public companies, because they tend to generate stable revenue streams from licenses, noted Frederic Kerrest, chief operator and co-founder of Okta ( OKTA ). ) An identity management software company published in 2017. Octa works with many of the latest companies that have become public.

"Success in the public market is about predictability. Wall Street loves the subscription model," he said.

Therefore, Slack and Cloudflare, a web optimization software company, said to consider an IPO later this year, will be worth watering, Kerrest said. Cloudflare could get a fall in value of $ 3.5 billion.

Nevertheless, the ease of performance of Uber and Lyft can scare away any other unicorns from going public anytime soon, says Kelly Rodriques, CEO of Forge, a company that allows investors (including employees) of private companies to sell stocks before a stock exchange listing.

"Companies can now be set up to stay private a little longer. We don't see another great wave of IPOs," Rodriques said.

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[19659008] But it may be too early to declare that this year's buzzy IPOs are wrong only because of a few months (or weeks) of poor performance. Facebook was blazing fiercely in its early months as a public company and is now – despite today's problems – one of the most valuable companies on Wall Street.

"When you look at Uber, Lyft, Pinterest and other well-known brands that went public, it may be too early to tell how well they are doing," says Alex Castelli, a consulting and tax consulting partner CohnReznick. the value can be created over time. There was a lot of hype going into these IPOs and it's difficult to handle those expectations. "

But Castelli admits that many new public companies are struggling to adapt because Wall Street investors are less forgiveness when financial results lack forecasts They also tend to be less patient.

"For Uber and Lyft there are many capital needs and large investments. It has led to questions about the business model, how they can be profitable and when, "he said.

Translation: Businesses wishing to become public must prove that they can start making money faster than later.



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