2019 Tech IPO Winners and Losers – Part Five
Special Cases Worthy of Note
If there was a tangible moment to mark the beginning of the IPO shakeout of 2019 it was April 1st, Lyft’s second day of trading, when Wile E. Coyote – running in mid-air – looked down.
After pricing at $72 (the top of an upwardly-revised filing range that valued Lyft at $21 billion, or $6 billion more than its last private valuation benchmark) Lyft shares opened the next morning at $87.33 and traded as high as $88.60.
What a headfake.
By the end of day two, shares were below the IPO price at $69.01 on the way below $60 by the end of the month. By the end of August they were below $50, where they have stayed (with a visit into the $30s in October) since.
What a disaster.
The most nimble IPO investors had an opportunity to sell at $87 the shares they bought the day before at $72. For everyone else there were losses that, at year end, were about 40%.
The market didn’t wait until day two for Uber and Peloton – both of which opened down on their first trading days. And by the time WeWork took a run at the door the market wasn’t having it at all. So we can call it the Great Lyft IPO Shakeout of 2019. Cash-hemorrhaging unicorns with comically bad disclosure went to a new place in the collective consciousness.
Consolation prize: Lyft might have erased $942 million of shareholder investment, but at least the company was able to raise more than $2 billion at a significant premium to its seasoned public valuation, and get through the IPO door well before investors slammed it shut on WeWork.
So here’s a funny one. French guys backed by a German incubator building an e-commerce platform to service Africa take their company public in the U.S. and, despite truly appalling fundamentals and an investment thesis that may be decades premature, the stock is the biggest percentage gainer of the year by a comfortable margin – topping out at 243% above its IPO price.
It didn’t take long for Lyft’s discovery of gravity to take hold of Jumia, creating a really fun situation in which an otherwise non-noteworthy company was – on a percentage basis – both the best long and also the best short of the year, finishing the year 54% below its IPO price and 90% below its high.
Missed it by that much.
CrowdStrike and Zoom were remarkably similar performers this year. CrowdStrike opened a little better than Zoom on its first trading day and peaked a little higher than Zoom over the course of the year.
CrowdStrike was a slightly smaller deal than Zoom, providing a smaller aggregate dollar gain, and – critically – couldn’t hold on to its share price appreciation as well as Zoom did to the end of the year.
Because of this round trip, CrowdStrike was both the second best (behind Zoom) long trade on a dollar basis – gaining $67.88 from its IPO price to peak – AND the absolute best short trade on a dollar basis – shedding $57.30 from its high. All this and it still finished the year up 47% from its IPO price.
This IPO helps put fears to rest that WeWork closed the IPO window for tech companies. Bill.com is a normal SaaS company that went public regular way (vs. a direct listing), performed in line with the pre-WeWork SaaS IPOs this year, and finished in the #2 spot for percentage gains. Investors seem to have quarantined in their minds the mega-cap cash-shredding unicorns, and value a proper tech company when they see one.