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2020 IPO Market Isn't Dead

Written By Monica Savaglia

Posted November 12, 2019

A lot of the media likes to entice fear and make it seem like everything is on the verge of crashing down with no point of return. After all, they have to get ratings and stay relevant, which means some exaggeration is bound to come along with their news stories. You have to be on the lookout for that. 

I took a course in college on feature writing. One of the books we read in class focused on how to watch TV news. The book touched on a lot of topics I was familiar with, but it also expanded on those ideas and allowed me to view the news more analytically. 

I think I’ve always been very intuitive and analytical, qualities that were encouraged by my dad, who also possesses the same characteristics. But I also grew up always watching the news, which helped me understand that even the news is a business.

A television network is sharing what it wants to share to shape your views in ways that will benefit the network. That’s why you should be exploring more outlets for news to get a fuller understanding.

People want to believe that news is truly unbiased, but that’s not always the case. A lot has changed since I took that course in college and read the book on how to watch TV news. 

Nowadays, we’re bombarded by the news. With the rise of social media sites and the internet as a whole, we now have too much information to choose from and too much to make sense of. We even have social media sites feeding people what they want to read and see based on the site’s data.

Now more than ever it is important for us to understand the source of the news and where that information is coming from. Technology has given us a lot, and we can’t sit back and be naive about it all. 

2020 IPO Market Isn’t Dead 

This year in the IPO market, investors and venture capitalists were disappointed. Some of the most talked-about and highly anticipated — not to mention extremely hyped-up — unicorn companies went public… and they were quickly seen as failures. They didn’t fail because the IPO market wasn’t ready for them; they failed because they had no profitability. 

The IPO market has had a history of glorifying technology companies aiming to go public, creating a story as to why a particular company will take investors into the future and become one of the biggest success stories in market history.

I’m not saying some companies don’t have that potential, but just because it’s a tech company that has a lot of private valuation doesn’t mean it will be the “next Apple” or “next Amazon.” 

Financials are important. Profitability is important. And staying on the path of profitability is even more important.

The IPO market and investors have endured a lot of market volatility over the past few years. No one wants to waste their money because of a “story.” Well, they don’t want to waste their money at all, and that’s why Uber (NYSE: UBER) and Lyft (NASDAQ: LYFT) both took a nosedive when they went public. 

Because of the failures of Uber, Lyft, and WeWork, people are saying the IPO market is dead. And that couldn’t be further from the truth. According to Renaissance Capital, 31 companies have filed or updated paperwork to go public in the last 90 days. 

Not only that, but these outlets talking about the death of the IPO market are also only talking about the failures and disappointments — which, if you saw the financials of these companies before they IPO’d, you’d know they weren’t making any money and were not viable options. 

These news outlets and “experts” want you to believe the IPO market is dead, but the reality is that 2019’s IPO market had winners but people aren’t talking about those winners. They are only talking about the bad side of things, sharing a pessimistic view on the IPO market just like every other news outlet on every other news story. Bad news sells.

Since October 2017, 21 IPOs are still up at least 100%. Those companies had the financials to back them and had growth trajectory. That’s why they are still up two years after going public. 

The failures of 2019’s IPO market have given everyone a reality check. People are tired of the rags-from-riches story. They’re exhausted of being told a company is the “next best” whatever.

Investors are more analytical and want to see the bigger picture of a company. Where is it headed? Who are its biggest competitors? What kind of growth does its industry have?

These are all important questions. That’s why the IPO market isn’t dead. And that’s why 2020 could easily be a strong year for IPOs.

Only true winners will go public. Those lackluster companies with no profitability will remain private.

Until next time,

Monica Savaglia Signature Park Avenue Digest

Monica Savaglia

Monica Savaglia is Wealth Daily’s IPO specialist. With passion and knowledge, she wants to open up the world of IPOs and their long-term potential to everyday investors. She does this through her newsletter IPO Authority, a one-stop resource for everything IPO. She also contributes regularly to the Wealth Daily e-letter. To learn more about Monica, click here.