This past year, 2018, was one of the strongest initial public offering (IPO) markets since 2014. That strength could continue into 2019, which could become an even bigger record-breaking year.
At the beginning of 2018, there were 136 IPOs priced. In total, they raised $37.72 billion. One huge contributor to 2018's increase in proceeds was IPOs were valued higher and had bigger deal sizes, with the average being $277.4 million. That's up 24% from 2017's $224.1 million average.
Larger IPOs mean more cash earned, which explains why 2018 was such a huge year for the market. To continue this trend, the market will need some high-valued private companies to step up.
And they are. This year could be the year of the "decacorn" IPO. What does that mean? A decacorn is a company valued at over $10 billion. And 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 about to see IPOs in some of the hottest industries right now. Industries like food delivery, ride-sharing, cybersecurity, and digital health. Last year paved the way for many of them, especially with the success of IPOs from companies like Tilray (NASDAQ: TLRY), Zscaler (NASDAQ: ZS), Eventbrite (NYSE: EB), and DocuSign (NASDAQ: DOCU), to name a few.
Going public is a great way for a company to market itself. In 2019, we expect to see IPOs from companies that are well funded, well regarded, mature (at least a decade old), and are household names. This will help create more success stories and high returns for this year's IPOs.
The list of companies expected to go public in 2019 is impressive: Airbnb, Robinhood, Palantir, DoorDash, CrowdStrike, GRAIL, WeWork, and Postmates. You may be familiar with them in one way or another.
These are high-value companies that have been operating and growing their businesses for at least the last decade. Going public as a start-up is considered a right of passage. It's one of the most obvious goals for a private company.
Let's take a look at some of these companies' valuations:
- Airbnb: $38 billion
- Robinhood: $7 billion
- Palantir: $20 billion
- DoorDash: $7 billion
- GRAIL: $3 billion
- WeWork: $3 billion
- Postmates: $1 billion
These companies are valued in the billions right now. So, imagine the possibilities when they go public…
I want to take a closer look at Airbnb, Robinhood, and Postmates. These three companies have crafted themselves into household names and have a lot to gain from going public...
If you're not familiar with this company, you should know it provides an online platform and app for home sharing. Users can post their entire homes, or rooms in their homes, to be shared with other users looking for a place to stay. It's a unique concept, and it's paying off.
This past year was a phenomenal one for Airbnb. It made more than a billion dollars in revenue for the third quarter of 2018. And its platform is growing. According to the company, more than 400 million guest arrivals have been logged at Airbnb lodgings since the service launched in 2008.
Airbnb has been valued at $30 billion and is on the list of the largest U.S. start-ups. In 2018, it directed a lot of attention towards expanding its business. It launched new services and offerings to help ramp up that growth.
One example is the addition of hotels and luxury homes to its platforms, expanding the variety of accommodations and giving users more familiar choices. As of right now, Airbnb is preparing for its public debut, which could very well happen this year.
Robinhood is a U.S.-based stock and crypto trading app. It has become very popular with the retail investors and reaching out to a market of investors who would have otherwise felt like investing was "too complicated" or they "didn't know where to begin." Robinhood's app makes it easy and convenient for these types of people to start investing — in addition to offering people zero-fee stock trading.
The startup is only seven years old, and it's been able to keep its free platform afloat. It does this by not having too many physical locations, maintaining a small staff for client services, and not spending a lot of money on promotional campaigns.
It is getting closer to raising almost $200 million in funding. This would put the company's valuation somewhere around $7 billion to $8 billion. Robinhood has a few things going for it. First, it has the opportunity to open up the retail investing space to some amazing growth. The company has brought a lot of attention to itself in the past few years, and it's even gained attention from some of Wall Street's experts like Jason Warnick, who has spent 20 years at Amazon.
Robinhood recently submitted an application to the Office of the Comptroller of the Currency (OCC) for a national bank charter. In the summer of 2018, the company reported 4 million users, and by the end of 2018 it had 6 million users. It caters to the growing millennial population that is looking for a way out from all the debt that has accrued over the years. Financial security isn't a feeling that this generation is familiar with, and Robinhood is marketing towards that while also focusing on improving its platform and business to meet those needs of a massive generation.
Rumors are circling that Robinhood is on its way to becoming a publicly traded company and when it does, you'll be the first to know!
Postmates operates in 3,500 cities across the U.S. and Mexico, and it makes five million deliveries every month. It's much more than other food-delivery services like Grubhub (NYSE: GRUB), Uber Eats, and DoorDash. Postmates brings almost everything to its consumer — from alcohol to Apple earbuds. The company offers an enticing incentive to its users. For $9.99 a month, customers get free delivery on orders of more than $15.
Those other food delivery companies: Grubhub, Uber Eats, and DoorDash are major competitors in this market, and Postmates is on the bottom tier when it comes to the market share it has in the industry. It added "Postmates Party" to its platform. This addition aims to remove the high price point of having food delivered. It does this by allowing users to see what merchants are on their way with another delivery — giving the consumer the opportunity to join the "party" and share the delivery.
Postmates CEO, Bastian Lehmann said:
We are driven by the vision of creating a logistics infrastructure that allows goods to move throughout a city at nearly zero cost to the consumer. Postmates Party is the latest innovation in on-demand delivery that will help us deliver on this vision.
Postmates is focused on expanding its platform and being an innovator that isn't afraid to try new approaches to grow its business. Postmates now as the ability to reach 70% of U.S. households and delivers food from 500,000 restaurants. For 2018, the company recorded near $400 million in revenue on food sales of $1.2 billion.
It’s 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 find 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.