Hi, and welcome to The Motley Fool's Bottom Line series!
In this video, we're taking a look at some of 2019's most notable billion-dollar IPOs
to see how they're performing since they've gone public.
There are a lot of companies with valuations over $1 billion that have gone public in 2019.
Here's a list of some of the largest and most well-known ones.
IPOs often get a lot of attention because they offer new opportunities to invest in
fast-growing companies with promising potential.
But, just because a company gets lots of attention leading up to its IPO, it doesn't mean that
its stock will perform well after the company goes public.
For examples of how quickly a billion-dollar IPO can fizzle, look no further than Uber, Lyft, and Peloton.
Uber was the largest and one of the most anticipated IPOs of 2019.
The ride-sharing company's stock climbed more than 11% in the first seven weeks after going public.
But those initial share price gains have faded.
Uber's stock is down 24% since its IPO amid rising concerns that the company is spending
too much money and not growing revenue fast enough.
Uber's losses have continued to widen, leaving investors worried that the company's former
meteoric growth and dominance in the ride-sharing market
won't be enough to make the company profitable.
Uber laid off 400 employees and announced a hiring freeze just two months after going public,
which is a bad sign for a company that's supposed to be in growth mode.
Additionally, the company is also dealing with an increasingly strict regulatory environment
for its drivers, which work as independent contractors for the company.
With the ride-sharing giant facing hurdles on multiple fronts, it's no wonder why Uber
has fallen out of favor with some investors.
Of course, it's hard to talk about Uber's IPO without talking about its ride-sharing competitor Lyft.
Lyft went public at a valuation of about $24 billion in March 2019 and has had a rocky
performance ever since. To date, Lyft's share price has tumbled more than 40%.
Lyft is unprofitable right now and lost $463 million in the third quarter of this year.
It's also facing similar hurdles to Uber.
As California moves closer to reclassifying independent contractors as employees, Lyft
could face increasing costs related to its drivers.
If other states follow California's lead, it could eventually put Lyft's and Uber's
underlying business in jeopardy.
Of course, not all of the IPO flops of 2019 happened to the ride-sharing market.
Peloton, which sells expensive tech-heavy workout equipment, as well as monthly workout
subscriptions, has seen its stock slide 11% since its IPO.
The company has done a good job of growing and retaining users, and has about 1.4 million
accounts right now, with a half a million connected subscribers, and a 95% customer retention rate.
But some investors are understandably concerned that consumer interest in buying luxury workout
equipment, in addition to a monthly subscription fee, could decline rapidly if and when a recession comes.
Despite the fact that many of the biggest billion-dollar IPOs of 2019 have fizzled out,
there have been some winners.
For example, Beyond Meat, the plant-based meat company, went public back in May.
Since then, its stock has been on a wild ride, rising more than 240% over the summer.
Beyond Meat's share price has fallen since then, but it's still up more than 25% since
the company's IPO.
In the third quarter of 2019, Beyond Meat's sales jumped 250% and the company reported
its first-ever profit, which is far more than many of 2019 IPOs can claim.
The bottom line is that IPOs can be exciting events for companies, but investors should
know that just because there's a lot of hype around a company going public, it doesn't
necessarily mean that the company's stock is going to perform well right out of the gate
or over the long term. Thanks for watching this video!
Do you think that 2019's billion-dollar IPOs will bounce back?
Let us know in the comments below.
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