First quarter of 2019 was a bust for tech Initial Public Offerings. Some blame it on the government shutdown and the inability to get the United States Securities and Exchange Commission to respond to preliminary S-1s (registration document). Fair play to that sentiment.
A company files an S-1, the US SEC reviews it, the SEC provides comments, and the issuer makes revisions in response to the SEC’s comments. Now, your preliminary S-1 has become a final S-1 and you are registered. In two weeks, you can begin banging your drum. If the government is shut down, this process doesn’t happen.
If you just take a Mulligan for Q1-2019 and focus on the rest of the year, you may see a deep lineup of tech companies, familiar names amongst them, getting ready to make the leap.
Here is my favorite recent public offering, demonstrating her flexible approach to the world. Can you reach down and grab your foot while in a seated position? Her name is Tempe and she is a Southern girl from Savannah. But, I digress.
Who, Big Red Car?
They are not hard to find, beloved reader. Here are some of them:
1. Lyft — little brother to Uber, ridesharing, filed and on the road drumming up interest, $25B, Unicorn
2. Uber — ridesharing, filed and being coy, $120B, Unicorn [That $120B is starting to look like $90B.]
3. Slack — group messaging, CEO says it’s worth $7B, Unicorn
4. Palantir Technologies — secretive data mining, getting ready, going to be hard to achieve its latest valuation, then again it was rumored in 2018 to be valued at $41B, Unicorn
5. CrowdStrike — cyber security software, hired Goldman Sachs, $3B, Unicorn
6. CloudFare — high end, highly secure web hosting with 10,000,000 web domains, Goldman Sachs on board, $3.5B, Unicorn
7. Big Switch Networks — software-defined network, in the preliminary stages of consideration, Unicorn
8. Vertiv — network power system manufacturer, hired Goldman and JPMorgan Chase, $6B, Unicorn
9. Rackspace — 20 years old, cloud computing used to be public until 2016, PE acquired, coming back for another bite at the apple, Unicorn
10. Zoom — video teleconferencing, S-1 filed, $1B, Unicorn
11. Beyond Meat — plant based meat maker, hired Goldman, JPMorgan, Credit Suisse, >$0.5B, not a Unicorn
12. AirBnb — home rental service, $31B, Unicorn
13. Pinterest — ad revenue jumped to $1B and it raised in 2017 at $12.3B, Unicorn
14. Postmates — food delivery, filed S-1, $2B, Unicorn
15. WeWork — co-working spaces, $47B, Unicorn
16. Robinhood — hipster brokerage, offers crypto trading, and no commissions relying on interest on cash holding, $5.6B, Unicorn
17. Instacart — grocery delivery, $8B, Unicorn
By no means is this an exhaustive list though it is the broad brush and has captured a fair slice.
Tech IPOs, Big Red Car?
In thinking about initial public offerings, tech is a small slice of the overall picture. As an example, biotech has been hot as a pistol.
The objective of this blog post is for you to see the great number of name brands coming out for their big bow.
What is also true is none of these companies have GAAP earnings, few have positive EBITDA, and few have positive “adjusted EBITDA.” These companies are all losing money and one is betting on some glorious future.
The investment bankers are getting a nice 7% fee and a 15% greenshoe share overallotment.
So, now you know, there is going to be a lot of activity or maybe not.
In any event, don’t EVER EVER EVER make any decision about your money based on the braying of a Big Red Car. You are not that stupid.