IPO's On Sale

IPO's On Sale

If you happened to be one of the founders or employees holding a stake in a technology company that the went public at the beginning of 2019, you could consider yourself fortunate having sold when markets were at or near their highs. Take the founders of Uber, Lyft, Slack or Pinterest: the share prices of these companies have declined substantially since they made their debut this year.

  • Pinterest, a social media web and mobile application company that operates a software system designed to enable saving and discovery of information on the web using images and, on a smaller scale, GIFs and videos has declined by 28% since peaking in August.
  • Uber, the online ride-hailing and food ordering application down by 35%
  • Lyft, a major competitor to Uber has seen it’s stock price decline by 52% since debuting in March.
  • Slack, a cloud-based set of proprietary team collaboration software tools and online services has lost 47% since coming to market on 20 June.

Now while it may not be possible to pinpoint a single reason for these declines, various factors may have contributed. These included:

  • Individual company profitability concerns
  • Global trade tensions
  • Slowing economic growth outside of the US.

More recently, the next-hottest and most talked about Initial Public Offering (IPO), We Work, has put a further dent in the the share prices of the aforementioned companies. As concerns around profitability and corporate governance has caused a major reduction in the company’s valuation (think billions of USD lower), doubt has been cast over new the new wave of IPOs. In a twist, Adam Neumann, co-founder of We Work casted a voted against himself which saw him give up majority control but remaining non-executive chairman.

Adding further pressure in the IPO/startup space is global entertainment group, Endevour, which pulled the plug on it’s IPO a day before it’s debut.

These events, along with numerous other factors have seen the shares of Uber, Lyft, Slack and Pinterest trading at all-time lows. Could this be an opportunity to capitalize while there is “blood on the streets”?

At current levels these shares certainly appear interesting, and, acquiring an equally weighted basket with a medium term view could be an opportunity to add alpha to a trading portfolio.

 

Last Close Prices:

Uber $30.29

Lyft $41.25

Pinterest $26.50

Slack $22.06

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Please chat to to the Unum Capital trading desk to get involved.

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