2018 was one of the strongest initial public offering (IPO) markets since 2014. That strength could very well continue into 2019. Maybe even do more than just continue that success, 2019 has the potential of becoming an even bigger record-breaking year.
There were 136 IPOs that were priced in the beginning of 2018. Those 136 IPOs were able to raise $37.72 billion!
In 2017, IPOs raised $52.22 billion for the entire year. If the first half 2018 raised $37.72 billion only about $15 billion less than what was earned during all of 2017. 2018 is on track of grossing more cash than 2017 ever did.
One huge factor of 2018’s increase is because the IPOs that have debuted this year were valued higher and had bigger deal sizes. The average deal size for IPOs in the beginning of 2018 was $277.4 million. That’s up 24% from 2017’s average deal size of $224.1 million.
Larger IPOs means more cash earned, which makes sense as to why 2018 has been a huge year for the IPO market. To continue the trend of a strong year for IPOs, the market is going to need some highly valued private companies to step up.
And they are -- 2019 could very well be the year of the Decacorn IPO. What does that mean? Decacorn is a word that’s used for companies that are valued over $10 billion. Those companies that have been waiting around for the right time to go public are ready to take the plunge...
2019 Will Continue the Trend
We’re going to see IPOs in some of the hottest industries right now. Industries like: food delivery, ride-sharing, cybersecurity, and digital health. 2018 paved the way for a lot of these industries, especially with the success of companies like Tilray (TLRY), Zscaler (ZS), Eventbrite (EB), and Docusign (DOCU)... just to name a few.
Going public is a great way for a company to market itself. We’re expecting in 2019 that we’ll see companies that are well-funded, well-regarded, mature (at least a decade old), and are household names to IPO. This will help create more success stories for 2019, not to mention, high returns for 2019 IPOs.
The list of expected companies preparing to go public is really impressive, and you are probably familiar with these companies in some way or another. In 2019, we expect the following companies to IPO: Uber, Airbnb, Palantir, Lyft, Slack, Doordash, Crowdstrike, and Grail.
These are highly-valued companies that have been operating and growing their businesses for the at least the last decade. Going public as a startup is considered a right of passage. It’s inevitable and one of the most obvious goals for a private company.
Let’s take a look at some of these companies valuation:
- Uber: $76 billion
- Airbnb: $31 billion
- Palantir: $20 billion
- Lyft: $15 billion
- Slack: $7 billion
- Doordash: $4 billion
- Crowdstrike: $3 billion
- Grail: $2.5 billion
These companies are valued in the billions right now, imagine the possibilities when they go public…
I want to take a closer look at Uber, Lyft, and Airbnb. These three companies have crafted themselves into household names and have a lot to gain when they go public.
Uber is a ride-hailing company that gives users the ability to hail a ride in their app when in need of a transportation.
It’s targeted to IPO in the first quarter of 2019, but that could be pushed back a little bit. This gives Uber the opportunity to get everything in line with its business in terms of numbers and growth potential.
Uber’s revenue growth increased by 9% from its second quarter to $2.95 billion. Unfortunately its net losses increased 32% over quarter over quarter. No surprise to Uber since it’s been focused on growing its business.
The company wants to expand on its other areas of business like UberEats, scooters, bikes, and freight. Ride-hailing accounted for less than 50% of Uber’s overall business, which means other areas are growing. These other areas are growing and will continue to help contribute to Uber’s overall business.
That is why Uber needs to prove that it’s spending money to make more money to potential investors, especially before it IPOs. It’s important to show investors that while the company is losing cash, it’s for a plausible reason which is growing other businesses so it doesn’t have to solely dependent on ride-hailing for its revenue.
Lyft is similar to Uber. It is also a ride-hailing company. Lyft is getting its ducks in a row, so it can meet an expected IPO sometime in the first half of 2019.
It’s hard not to put these two ride-hailing companies up against each other since they both have similar business plans and both have be discussing IPO-ing in 2019. However, they are different in a lot of ways. Lyft is smaller in terms to valuation with a $15 billion valuation instead of a $76 billion, however, that’s still a massive valuation for a company that was founded only six years ago.
Lyft has raised $4.9 billion in capital, and it reported $909 million in revenue in the first half of 2018. This was a 120% increase from the previous year’s first half. Lyft is growing its revenue which is a good sign.
According to data from Edison Trends, Lyft now controls about 31% of total ride-share spend in the U.S. compared to the low-to-mid teens it saw in 2016. Lyft is rapidly growing its market share and in a few years it could very well be reaching a 50% or higher market share. Making the company’s race to profitability even quicker.
If you’re not familiar with this company, it provides an online and app platform for home-sharing. Users can put their house or a room in their house up to be shared with other users looking for a place to stay. A unique concept, but it’s paying off.
2018 was a phenomenal year for Airbnb. It made more than a billion dollars in revenue for the third quarter of 2018. Not to mention, it’s platform is growing. According to the company, more than 400 million guests arrivals have been logged at Airbnb lodgings since the service launched in 2008.
Airbnb has been valued at $30 billion and it’s on the list of the largest U.S. startups. In 2018, it directed a lot of attention towards expanding its business has has launched new services and offerings to help ramp up that growth.
One example of a new service and offering is adding hotels and luxury homes to its platforms -- giving users more choices and more familiar choices but with the same easy to use platform.
As of right now, Airbnb could be planning for an IPO in the middle of 2019 or earlier.
2019 is going to be a big year for IPOs! You won’t want to miss out. Here’s your chance to stay up to date on the latest IPO news and finding out which companies are on the verge of going public.
Until next time,
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.