After a turbulent and volatile 2018, there are many companies that plan to conduct initial public offerings (IPOs) in 2019. Some companies already have formally filed their S-1 and equivalent forms with the U.S. Securities and Exchange Commission (SEC). Other companies have filed confidential data with the SEC for IPOs, and other so-called unicorn companies, those with private market valuations north of $1 billion, are all highly speculated to come public.
Stock market investors actually want to see more IPOs. There has been widespread criticism that many companies are waiting too long to come public. Some investors have bought into these companies on secondary private company exchanges as insiders, and prior backers have sold shares here and there. Unfortunately for unicorns and regular companies, the 2018 IPO market was less than stellar for investors. Barron’s even reported at the end of December 2018 that 65 of the past 100 such offerings were “busted IPOs” as their market prices were actually under their formal IPO price — and some of those are considered to be great companies.
Even the best of companies can suffer handily during bad markets. That usually depresses valuations for IPOs, even if the market has been chomping at the bit for a company to finally have an IPO.
24/7 Wall St. has compiled a list of companies likely be on the IPO docket for 2019. Note that some of these companies have been on that IPO docket, or at least were believed to be, for more than a year. Companies such as Uber and Lyft, Airbnb, Pelaton, Pinterest, Slack and WeWork are all on the list here. There are also other companies, some of which are widely anticipated to come public, that may be unheard of or not very well known to the investing community. And for the record, this is a preliminary list and some data may change in a moment’s notice that would take any of them off the IPO docket.
Here are more than 15 highly anticipated IPOs to watch for in 2019.
Lyft Versus Uber
Both Lyft and rival Uber Technologies reportedly filed confidential IPO paperwork with the SEC in 2018. These are two of the most heavily watched companies of the entire IPO class of 2019, and they could set the stage for a massive pop to the dollar values of unicorns and IPOs for 2019. Of course, this assumes that either or both still choose to continue the process of coming public. And also there are risks here that both companies are not profitable and may have waited too long to come public.
Lyft actually may beat its larger rival Uber to market, but there have been concerns that the recent stock market volatility could get in the way. In fact, coming public if the market were to continue drifting lower in 2019 might end up creating the equivalent of a dreaded “down-round,” wherein venture-backed companies raise new capital at a lower valuation than in prior funding rounds.
The market may want profits if the recent volatility continues. Neither Lyft nor Uber can claim to be anywhere close to profitable. Lyft reportedly hired JPMorgan as its IPO manager, with an anticipated value of $15 billion. The Wall Street Journal reported that Lyft is hemorrhaging money, to the tune of a $1 billion loss based on last quarter’s revenue and loss rate. Uber has posted a private valuation of more than $60 billion, but after losing just over a billion in the third quarter, its annual loss run rate would be $4 billion.
Airbnb
Airbnb has competed against the hotel industry and other home rental services for years now, and some investors have been calling for it to have an IPO, long before 2019. Even during the summer of 2018, it was widely reported that Airbnb would be public around June of 2019. Still, inside turnover has created some uncertainty for a company that was reportedly valued at $31 billion after a $1 billion capital raise in 2017. Airbnb also was said to have hit the $1 billion per quarter in revenues for the third quarter, and the company previously was reported as having hit profitability in prior reports. It also has expanded with experiences, boutique hotels, and it has its “most wishlisted homes” that can be rented around the world.
Beyond Meat
Beyond Meat filed its S-1 form with the SEC in November, with a preliminary target of $100 million for filing purposes. The company plans to list its shares on the Nasdaq under the symbol BYND, and its named underwriters were listed as Goldman Sachs, JPMorgan, Credit Suisse, Merrill Lynch, Jefferies and William Blair. This is one of the fastest growing food companies in the United States, but its portfolio of “meats” is actually plant based. While Beyond Meat increased net revenues from $8.8 million in 2015 to $32.6 million in 2017, the company still is losing money, with a $22.4 million net loss in the first three-quarters of 2018.
Cloudflare
Cloudflare, which provides software to improve security and load-times for websites in its content delivery network, showed in December that it had 25 terabytes per second of total capacity from a 165 data center global footprint. It most recently was expected to come public during the first half of 2019, with a valuation of some $3.5 billion. That was before the latest volatility in the stock market. A CNBC report from October of 2018 noted that Goldman Sachs was going to bring the company public. Its prior investors have included Fidelity, Alphabet/Google, Microsoft, Baidu and Qualcomm. As of December 2018, Cloudflare said that it is trusted by over 12 million different web domains for a faster, more secure and more reliable internet experience.
GE’s Healthcare
GE Healthcare is already quasi-public because it is still under General Electric Co. (NYSE: GE). That may be about to change as GE desperately tries to narrow its core industrial focus to get out of its current quagmire. CEO John Flannery is eyeing multiple sales, spin-outs and the like to deleverage GE’s balance sheet. Media reports out in mid-December of 2018 said that GE had confidentially filed for an IPO of its health care unit. This would be a big deal, but it remains to be seen how GE will get its full unit out to new and existing shareholders. Barron’s recently mentioned that GE’s health care unit could be worth as much as $60 billion on its own.
Palantir
Palantir Technologies is a top private data analytics and data mining outfit that caters to government clients. The company has been around for more than a decade and was founded by Peter Thiel. A report from The Hill in October of 2018 suggested that Palantir could have a valuation of as much as $41 billion, but that figure was twice the value of prior estimates. The company is known for being secretive, so who really knows what the valuation will be. We will have to just wait and see if 2019 is the year that the company is more open to the public.
Pelaton
Pelaton was expected to come public in 2018 after a $500 million or so capital raise. Now that’s a 2019 expected IPO for the spin-bike company with a social aspect as its catch. Spin cyclists can buy a Pelaton bike for as low as $2,245, with packages of up to almost $2,700, and its clients can access unlimited spin class content for $39 per month. The company has advertised aggressively enough that some people may have assumed it came public already. CNBC reported in the summer of 2018 that Pelaton has raised a total of almost $1 billion in capital, with a valuation of more than $4 billion at the time.
Pinterest could be the next (or maybe the last?) of the social media giants to come public in 2019. In mid-2018, Pinterest was said to be on the path to having $1 billion in annual revenues, with a value at the time of $13 billion to $15 billion for its 200 million users. CNBC reported that Pinterest planned to target a mid-2019 IPO. With Facebook, Twitter and Snapchat having issues of their own, Pinterest has become a place for advertisers in fashion, beauty and other industries to get in front of social media users without the public baggage of the other social media players.
Slack
Slack Technologies reportedly has hired Goldman Sachs to lead the company to an IPO. The team messaging and collaboration solutions company started in 2014 and now claims to be the fastest growing business application in history, with millions of users around the world. The December report showed 8 million daily active users, with 65 of the Fortune 100 companies having employees using Slack, and a total of 500,000 organizations (and 70,000 paying companies) using its platform.
SpaceX
SpaceX is a leader in the privatization efforts of space, but even after $500 million in funding, it remains unclear if and when the company will even be on an IPO docket. And being led by Elon Musk sure brings the reminder that Musk hoped to take Tesla off the public markets probably makes this unicorn and its reusable space rockets an outside shot here. Either way, many investors have wanted to be able to own a portion of SpaceX.
WeWork
WeWork was reported to have taken in a sum of more than $8 billion in 2018 from Softbank and is thriving off the gig and startup economy. The company now caters to companies of all sizes, with short-term or long-term leases for shared office and event space. A December update on how 2018 turned out showed that WeWork’s own data claims it now is in 99 cities and 26 countries, with some 400,000 members across 400 locations globally. For 2018 alone, WeWork also showed that it added 200 locations in 34 new cities and eight new countries. One outside report even showed that WeWork was on the way to becoming the biggest private office tenant in New York City buildings. The company reportedly has indicated it would come public, but when remains to be seen.
International IPO Watch for U.S. Listings — Maybe
The biggest IPO anyone may have ever seen, even compared to Alibaba, would be the Saudi Aramco IPO. This has been on the IPO docket for seemingly an endless period now, and it has been touted as the largest market cap of all companies in the world (even over Apple) in multiple coverages. Most recently, the Saudi kingdom has been under fire for the murder of Jamal Khashoggi, with implications all the way up to the top. With so many nations and companies putting pressure on Saudi Aramco, it seems that the only sure bet for an IPO here would be a return to $100 a barrel oil and a sudden global affinity for Saudi Arabia after a turbulent 2018. Those seem unlikely, and most investors believe that the Saudi Aramco IPO, when it eventually does come, will not even have its primary listing in the United States.
Hexo, a Québec-based licensed producer of marijuana products in Canada, filed its Form F-10 with the SEC in late December of 2018 for an IPO. The company registered total securities valued at $599 million, but its shares already trade on the Toronto Stock Exchange under the ticker symbol HEXO. The company previously was known as Hydropothecary, and it has finalized a joint venture deal with brewer Molson Coors Canada, a subsidiary of Molson Coors Inc. (NYSE: TAP). Molson Coors owns 57.5% of the venture, which has been named Truss, with a wholly owned subsidiary of Hexo owning the remaining 42.5%.
Gateway Casinos & Entertainment, one of the largest and most diversified gaming and entertainment companies in Canada, filed its F-1 for a foreign IPO in late December, and it plans to trade on the New York Stock Exchange under the symbol GTWY. Morgan Stanley had been the sole underwriter listed for this offering, but the company has added Credit Suisse, Goldman Sachs, CIBC Capital Markets, Macquarie Capital and SunTrust Robinson Humphrey. Its operations currently include 26 gaming properties in British Columbia, Ontario and Alberta, with 13,618 slot machines, 429 table games (including 48 poker tables), 561 hotel rooms, 80 food and beverage outlets and 8,500 employees.
China IPOs Coming, Trade War or Not
Futu Holdings is a Chinese online stock broker that was founded by a former Tencent employee and also is backed by Tencent Holdings. The company now plans to raise up to $300 million in a Nasdaq-listed IPO. The company reported a $12.8 million profit on $74.6 million in revenues in the first three-quarters of 2018. It claimed to have 5.3 million users at the end of September, with about 120,000 paying users. Futu primarily targets retail investors in China who trade stocks listed in Hong Kong and the United States.
Coming into the last trading day of 2018, the S&P 500 was down by 8% for the year, versus year-to-date performances of −6.7% for the Dow and −4.6% for the Nasdaq. With six of the prior 10 trading days having drops of over 300 points, the Dow also managed to post its greatest one-day gain ever. Still, reports were out that the month was set to be the worst December stock market performance back to the Great Depression. That can all weigh heavily on an IPO market at the start of a new year.
If the history in recent years acts as an indicator, it would be prudent not to expect every one of these companies to come public, whether or not market conditions are favorable in 2019. Stay tuned.
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