Daily Management Review

Top 4 tech IPOs worth attention


In the first half of 2019, Uber, Lyft, Slack, Zoom and other companies debuted on the stock exchange, but their dynamics turned out to be ambiguous. Zoom, for example, has grown by 45% since its public offering on April 18. Lyft, meanwhile, has fallen by 22% since its debut on March 29.

Provided that stable market conditions persist, several more multibillion-dollar initial offerings will appear on the market by the end of the year – and there are some of them worth special attention.

1. Medallia

Although the company’s name is not well-known as, say, Uber, this 18-year-old technology-marketing services provider is an important player in the corporate software market. In 2018, its revenues amounted to $ 313.6 million, which is 20% more than in the previous year. Last year, the company's loss amounted to $ 82.2 million, which was associated with the management's investment in growth.

Much of Medallia's revenue ($ 246.8 million in 2018) comes from software subscriptions. Investing in this company is suitable for investors who prefer predictable sources of income. As of the last round of private financing in February, Medallia was valued at $ 2.4 billion.

2. Robinhood

Millennials are looking for easier ways to invest, and the 6-year-old firm Robinhood benefits from this trend. The application created by this company allows buying and sell stocks listed in the US without commission. At the end of last year, representatives of Robinhood reported that there are approximately 6 million user accounts. The company was last valued at $ 5.6 billion.

How does the company earn then? The answer is ambiguous. In October 2018, experts from Bloomberg analyzed financial reports of the company and calculated that Robinhood receives about half of its profits from controversial practices known as “payments for the order flow”, that is, flow of applications from customers. Founders of the company have subsequently stated that it was only a small percentage of the income, and in general Robinhood earns money by selling premium subscriptions and receiving interest from customer funds and shares.

The company has not yet applied for an IPO, but in September 2018 its founder and CEO Baiju Bhatt, announced that his intention to make the company public in the current year.

3. Postmates

Earlier this year, Postmates was valued at $ 1.85 billion and became one of the first startups to offer on-demand delivery of products and other products. The company currently operates in approximately 550 cities. According to representatives, Postmates performs 5 million deliveries per month.

In February, the company filed a confidential IPO application and has not publicly disclosed its financial results since then. Reportedly, in 2018 Postmates profit amounted to $ 400 million. The main competitors of the company Uber Eats, Grubhub, DoorDash and others. A recent Zion & Zion survey showed that the Postmates delivery application was the fourth most used.

4. WeWork

WeWork, renamed We earlier this year, is another firm with big ambitions and an incredible preliminary estimate of $ 47 billion as of January 2019. We is focused on common co-working sites and intends to expand its business to other areas, such as education and residential real estate. The firm is already among the largest corporate landlords in the world, and as of December 31, We representatives reported 401,000 members in 425 localities.

The company filed a confidential IPO application in April, but its large financial losses are likely to delay the debut date on the stock exchange: according to the income report for March 2018, the loss was $ 1.9 billion with revenue of $ 1.82 billion. Nevertheless on Sunday, Reuters reported that the company expects to raise up to $ 4 billion in debt on the eve of an IPO.

source: thestreet.com