Everyone wants to be the next Amazon, which lost money for years before finally turning a consistent profit in 2015. Is there a limit to our tolerance for money-burning tech firms?
Another week, another crop of unicorn IPOs.
That’s not technically true, since it’s been a whole two weeks since Pinterest (PINS) and Zoom (ZM) went public on the same day. But it certainly feels that way to many market watchers, who can hardly keep up with the flurry of new filings and financial disclosures by the tech unicorn and decacorn set of IPO hopefuls.
With the markets still roaring, appetite for high-growth offerings remains strong — even if, like Uber, the companies are losing money hand over fist. Atish Davda, CEO of the pre-IPO marketplace EquityZen, said that demand for shares in tech unicorns has been high enough that investors seeking shares are paying a handsome premium relative to their private valuations.
“From our standpoint, it’s clear that there’s a tremendous amount of interest in these high-growth companies, including ones that aren’t profitable,” Davda said. In its recent IPO prospectus, Uber revealed that it lost $1 billion last quarter — a fact that hasn’t dampened interest in the offering, which was reportedly oversubscribed by day two of its IPO roadshow.
Read more here: https://www.thestreet.com/investing/stocks/ipo-fatigue-14948254