Is the Tech IPO Window Closing?
Is the Tech IPO Window Closing?
(Bloomberg) -- The megawatt technology IPO always seems just over the horizon. If you’re hoping for some big, new publicly traded tech stocks next year, the latest market trouble should be profoundly worrying.
Facebook Inc. went public six years ago and Alibaba Group Holding Ltd. four. Since then, things have been a bit boring. We’ve had some mildly interesting tech unicorns go public: Snap Inc., Xiaomi Corp., Dropbox Inc. and Spotify Technology SA—if you count the music streaming company’s strange direct listing. When Snap went public, there was some hope that it would be the next big thing. The narrative was that the messaging company’s early initial public offering would allow it to grow into the next social media giant. Instead, the company’s market capitalization has slid from $18 billion last year to less than half that today. Chief Executive Officer Evan Spiegel wrote a long memo that said very little reassuring, and a new analyst report warns that the company is “quickly running out of money.”
So if you like big dramatic tech business stories, ones with tales of great success and greater riches, you’ve been left hanging for some time. Uber Technologies Inc. has to be at the top of your list. The SoftBank deal last year let some of the winds out of the sails, making Uber co-founder Travis Kalanick a billionaire while letting other shareholders cash out some. Still, there’s plenty of appetite among investors and employees for a public offering. Uber CEO Dara Khosrowshahi tells anyone who will listen that the company plans to go public in the second half of 2019. It’ll probably stick to that, regardless of economic conditions, if only because some shareholders will be free to sell their shares on the private markets by then, complicating things for the company.
Airbnb Inc., once a top prospect, is out of the conversation. The home-rental company parted ways with its chief financial officer partly over how hurried the company should be about going public. Laurence Tosi, the former CFO, said soon. CEO Brian Chesky disagreed.
Pinterest Inc. has been pretty quiet. Palantir Technologies Inc. has flirted with a deal of some kind but at the age of 14, seems perpetually private. WeWork Cos. has practically unlimited pools of money available to it as a private company. Far from an IPO, SoftBank Group Corp. recently discussed taking a majority stake in the co-working company.
Slack Technologies Inc. is eyeing a public offering early next year, according to the Wall Street Journal. Another candidate is Lyft Inc. The Uber rival plans to go public before Uber and is asking bankers for underwriting pitches.
If you’re a banker hoping for some massive fees next year in a landmark, once-in-a-generation listing, things had been looking good. The corral was looking pretty full. Just last week my colleague Lizette Chapman wrote, “So far this year, the number of tech and telecom offerings in the U.S. is at the highest level since 2014, and more are expected to follow suit.” She adds boring enterprise companies, Anaplan Inc. and Qualtrics LLC, to the list of prospective IPOs.
But the recent market trouble—the NASDAQ Composite Index is down 8.5 percent in the past month—should have you worried. Tencent Music Entertainment Group is pausing a planned public offering for the Chinese music-streaming company due to the market turmoil, the Wall Street Journal reported on Thursday. Some planned IPOs outside of the tech sector have been shelved. Vehicle fleet operator LeasePlan scrapped an IPO that could have valued it at $8.1 billion.
Nobody likes to go public when things are bad. Companies want a story of ascent, not one of barely surviving hard times. Some startups will certainly use the stock market turbulence as an excuse to stay private. After all, they’ve come up with plenty of excuses for why they can’t face the markets for years. Why brave them now?
And here’s what you need to know in global technology news
Facebook went on a misinformation purge. The company removed 559 pages and 251 accounts, many operating from within the U.S.
Tencent share buybacks have hurt the company’s stock price, instead of helping. That’s not how it’s supposed to work.
Ether’s creator said he’s not that rich. He’s denying that he’s a billionaire after allegations that the cryptocurrency’s creators pre-mined Ether before releasing it to the public.
Lime picked a fight with San Francisco over scooter permits. The company said it was unfairly denied a permit because it deployed scooters before rules were in place.
To contact the editor responsible for this story: Mark Milian at mmilian@bloomberg.net
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