Breaking Down Recent IPO’s in April
The past month has been extremely active when it comes to initial public offerings (IPOs) from major companies in tech. For some, like Lyft , whose company stock suffered after their IPO, April can really be the cruelest month. But others, like Zoom , experienced sky-high gains.
Why Are So Many Tech Giants Going Public?
An IPO often comes as the culmination of years of work building a company. Before its IPO, a company is held in private hands. Shares may exist, but they are likely only owned by company insiders, employees and perhaps early investors like venture capitalists. After an IPO, shares are made available to anyone who wants to buy them on the stock market.
One of the main reasons a company might want to go public is to raise capital. Consider that in one of the largest IPOs to date, Alibaba, the Chinese online marketplace, raised $25 billion for itself and its investors.
Late March and the month of April saw a number of hotly anticipated tech stocks go public, including the ill-fate rideshare company Lyft, office solutions companies, Pinterest and an African online marketplace. Here’s a look at these five IPOs, how they were valued, what happened when the opening bell rang, and what their outlook might be.
A quick note about IPO and stock terms: With each of these companies, we’ll look at ticker symbol, IPO date, IPO price, and market capitalization at opening. The ticker symbol is the symbol stocks trade under on the stock exchange, the IPO date is the day the IPO happened, IPO price is the initial price set before trading starts, and market capitalization is the total dollar value of the company.
Lyft, Inc.
Lyft is a San Francisco-based transportation company operating in the United States and Canada. It offers Lyft ridesharing services where riders request and pay for rides through the company’s mobile app.
The company was launched in 2012 by John Zimmer and Logan Green. In addition to ridesharing services, the company offers Lyft scooters and has made forays into the field of self-driving cars.
What to Know About Its IPO:
• Ticker symbol: LYFT
• IPO date: March 29, 2019
• IPO Price: $72
• Market Cap at opening: $24 billion
What Happened Next?
Demand for Lyft stock was high, up 8.7% on its first day of trading. But those highs were not to last. By mid April, Lyft stock slid 22% below its IPO price. The stock’s slipping price left analysts wondering whether the company was overvalued and cast a shadow on other tech companies that have raised large sums in private markets before going public.
Zoom Video Communications, Inc.
If you’ve worked in any sort of collaborative workplace over the last few years, chances are you’ve encountered Zoom . Headquartered in San Jose, California, Zoom provides remote conference services through a cloud platform that supports video and audio conferencing, online meetings, webinars, and chat capabilities. The company was founded in 2011 by Eric Yuan.
What to Know About Its IPO:
• Ticker symbol: ZM
• IPO date: April 18, 2019
• Price per share at opening: $36
• Market Cap at opening: $10 billion
What Happened Next?
On its first day of trading, shares of Zoom immediately soared 81% over its IPO price to $65 per share. By the end of the day, share prices were up 72% and the company was worth a cool $16 billion .
PagerDuty
At first glance, this company’s name may call to mind images of the little black beepers cool kids wore on their belts in the 90s. Yet, PagerDuty actually has nothing to do with pagers. Rather, this tech company helps software developers and operates work together better. PagerDuty was founded in 2009 in Toronto, Ontario by Alex Solomon, Andrew Miklas, and Baskar Puvanathasan.
The company is a cloud computing company that offers SaaS, or software as a service, that helps developers, IT operations, and business leaders prevent and address IT incidents and events that may impact customers.
The platform uses machine learning and analytics to alert clients to IT disruptions or outages. The idea is to limit damage and reduce recovery time and costs, while preventing similar incidents from happening again.
What to Know About Its IPO:
• Ticker symbol: PD
• IPO date: April 11, 2019
• Price per share at opening: $24
• Market capitalization at opening: $1.8 billion
Pinterest, Inc.
Pinterest is an online and app-based social media platform that allows users to share photos, express their tastes, and visually discover new interests.
Users can post, or “pin,” images to their own or other users’ boards, which operate like a digital scrapbook and are usually organized by some sort of theme. User can also follow others on the app, liking and commenting on their boards and even re-pinning images.
Through this online community, users can share their interests with other like minded users. Pinterest is headquartered in San Francisco and was founded by Ben Silbermann, Paul Sciarra, and Evan Sharp.
What to Know About Its IPO:
• Ticker symbol: PINS
• IPO date: April 17, 2019
• Price per share at opening: $19
• Market capitalization at opening: $12 billion
What Happened Next?
Out of the starting gate, stocks of Pinterest jumped to $23.75 , 25% above it’s IPO price. The stock closed the day up 28% and by the end of trading the company was valued at roughly $16 billion. By late April the stock was trading above $26 per share .
Jumia
You may not have heard of Jumia , unless you’ve found yourself in Nigeria recently. Yet, the website site has been styled the “Amazon of Africa ” and has 15 million visitors per month and over 4 million subscribers. The company was launched in Lagos, Nigeria in 2012 and is an online marketplace for consumer goods like electronics, home supplies, and beauty supplies and fashion.
The company’s online platform connects buyers and sellers in places where consumer access to traditional retail has been unavailable or difficult to obtain. Over the last seven years, the company has expanded service to African nations, including Egypt, Ghana, Morocco, Tanzania, and Uganda among others.
What to Know About Its IPO:
• Ticker symbol: JMIA
• IPO date: April 12, 2019
• Price per share at opening: $14.50
• Market capitalization at opening: $1.3 billion
What Happened Next?
Prices of the company stock started out of the gate at $18.95 , and the stock closed up 75% on its first day. The company raised $196 million with its IPO.
Upcoming IPO Stocks
After the flurry of activity in late March and April, investors will hardly have a moment to catch their breath before a new round of anticipated IPOs potentially rolls out this year.
Among the most anticipated is Uber, which will reportedly begin trading in May. Some analysts worry it may be overvalued and that the stock will do poorly, experiencing a similar fate to Lyft, its main ridesharing competitor.
Analysts have also been hotly anticipating an IPO from Airbnb, the online marketplace that allows people to rent out vacation properties or spare rooms in their homes to guests.
However, though the company may start trading on the stock market in 2019, it doesn’t appear to be in a rush to join its tech peers. Company founders say that while they have taken steps to make an IPO in 2019, it’s possible the date could be pushed to next year .
Slack, which offers an office communication platform is also set to offer shares to the public this year. However, they plan to use a direct public offering (DPO) instead of an IPO, so stocks will be made available directly to the public without passing through an underwriter first. Slack would be the second major company to make a direct public offering on the New York Stock Exchange following Spotify’s DPO last summer.
If you’re a fan of burger substitute Beyond Meat Burgers, you may be excited to learn the company plans to go public in early May. The company plans to offer shares at $19 to $21 per share, which could help it raise as much as $184 million and value the company at about $1.2 billion.
If you want to keep an eye on any of these companies or you’re interested in upcoming public offering generally, you can find out more through the New York Stock Exchange’s IPO Center . The Nasdaq also provides lists of recent and upcoming IPOs.
Investing in IPO Stocks
You can buy a stock as soon as markets open on the day of its IPO. You can buy a stock on the day of its IPO after it starts trading on the secondary market. Getting in on the ground floor can be really exhilarating, but remember that no one really knows what will happen when the stock hits the market.
Stock prices could go up, or they could drop significantly. As with any investment, purchasing a stock soon after it IPOs comes with risks, including the risk of loss. Further, this is much more speculative investing than investing in a company that has an established public presence.
Investors may choose to invest right away and hope that prices go up, or they may hold off for a few months to let any potential volatility die down. It may even be worth waiting to buy stock until the company’s IPO lock-up period has passed.
This is the period during which company insiders are forbidden to sell the stock they held before the IPO. After this period ends, they can sell the stock, which can cause share prices to dip.
If you’re looking to purchase stock after an IPO, you’ll need to do so within an investment account or brokerage account. When buying and selling stocks inside a brokerage account, investors usually place an order with a stockbroker who will complete the sale for you. For a hands-on approach to investing yourself, consider an active investing account like those available from SoFi.
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The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC .
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