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Start-up IPOs 2019

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Who is buying?

Lyft IPO last Friday. Slack is going to list on NASDAQ while Pinterest and Uber are going NYSE.

Other major ones:

  • Zoom (actually profitable!)
  • Airbnb
  • Postmates
  • Robinhood

I'd go all in on Airbnb and maybe Pinterest but passing on all others.

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1 hour ago, Sbbruin said:

Lyft might be primed for a buy.  Looks like the price is flattened out.  

In the historical context of their three day trading history I guess you are correct.

Personally I think Lyft and Uber (also currently on the IPO roadshow) were forced into going public because VC's were done pouring 100's of millions into wildly unprofitable businesses at increasing valuations. IPO's are just a way to shift the burden of funding these companies from the VC's to public investors. Until they flip the switch to driver less fleets, these companies have no chance at profitability. I don't see that happening in a close enough time frame that I would invest now.

They will continue to battle each other for user growth at the expense of profitability. They didn't create a new form of transportation, so they are saddled with the same basic  transportation expenses as taxis. If they can eliminate the labor costs, it would be a game changer, but until that time they will subsidize the cost of the rides by selling more and more stock. They lost $1billion dollars in 2018 on $2 billion in revenue, and yet their market cap is $25 billion. Valuation looks completely out of whack. I won't short the stock, but will take a stab at some puts. Uber as well when they IPO. Now that I have documented my idiocy, we can all have a laugh at my expense in future years. 

 

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I don't see driverless cars as fixing Lyft/Uber's finances. If we do make that switch, that means that Lyft/Uber have to finance those vehicles themselves, instead of having drivers that are desperate or bad at math do it for them. And how will more vehicles to handle surges work? Right now, the drivers finance that, when more decide to drive when they make more. With a driverless fleet, it will be up to Lyft/Uber to pay to have those extra vehicles available. I think a driverless world is likely a lot WORSE for Lyft/Uber than what we have now.

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IPO Outlook For The Week: Ruhnn, Silk Road Medical, NGM Biopharmaceuticals And A Trading Platform

by Elizabeth Balboa

Ruhnn Holding Ltd (RUHN) will issue 10 million shares between $11.50 and $13.50 each Wednesday on the Nasdaq. The offering represents 100 percent of outstanding shares.Backed by Alibaba Group Holding Ltd. (NYSE: BABA), the Chinese company creates networks connecting fashion, entertainment, culture and gaming influencers to clients, retailers, manufacturers and suppliers.

 
 

NGM Biopharmaceuticals Inc (NGM) will issue nearly 6.7 million shares between $14 and $16 each Thursday on the Nasdaq. The offering represents 10.3 percent of outstanding shares. The clinical-stage biotech company advances candidates for non-alcoholic steatohepatitis, reverse liver fibrosis and type 2 diabetes.

Silk Road Medical Inc (SILK) will issue nearly 4.7 million shares between $15 and $17 each Thursday on the Nasdaq. The offering represents 16.3 percent of outstanding shares. Based in California, the medtech company develops and manufactures proprietary transcarotid medical devices for carotid artery disease.

Tradeweb Markets Inc. (TW) will issue nearly 27.3 million shares between $24 and $26 each Thursday on the Nasdaq. The offering represents 100 percent of outstanding shares. The OTC trading platform serves institutional, wholesale and retail investors in more than 60 countries with government bonds, mortgage securities, municipal bonds, credit and derivatives.

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My understanding is that rideshare companies take about 20-25% of the current fare. While drivers may be bad at math, they are making some money, just not as much as they think. Uber/Lyft can finance fleets at lower costs than an individual, so I have to believe there is a path to profitability if they can capture the 75% they pay out today.

How profitable is the question, and what are people willing to pay today to own a business that requires a significant change in their fundamental business model to justify these market caps. I have head Uber is valued 5x more than Lyft in previous funding rounds, so it will be interesting to see the market cap when they IPO.

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I don’t get how Uber and Lyft aren’t profitable. You host a fucking app and contractors do all the real work. They don’t get paid by you until you’ve already been paid and skimmed your share.

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1 hour ago, CooterBrown said:

I don’t get how Uber and Lyft aren’t profitable. You host a fucking app and contractors do all the real work. They don’t get paid by you until you’ve already been paid and skimmed your share.

Not a Uber or Lyft expert.

From talking to Uber and Lyft drivers I have heard some talk of getting vehicles through the company. 

Don’t know the breadth of that program.

Uber anecdote:  Had a Uber driver charge me a cancellation fee for a ride to the airport because his trunk was full of crap and he couldn’t carry my luggage.  I am sure quality control has to be a got damn nightmare.

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3 hours ago, CooterBrown said:

I don’t get how Uber and Lyft aren’t profitable. You host a fucking app and contractors do all the real work. They don’t get paid by you until you’ve already been paid and skimmed your share.

I've always wondered the same. How are they not making crazy money? Uber doesn't even have a customer support line for riders.

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They hire a fuckton of engineers, spend a fuckton on R&D (autonomous driving technology ain't cheap), and they spend a fuckton of money on luring drivers and riders to the platform. All of those incentives (20% off your rides for 30 days) in your inbox to use Lyft or Uber add up. 

Ultimately the question becomes can they continue to grow revenues while slowing the growth on expenses and ultimately become profitable. Currently both companies dont have a lot of motivation to cut expenses as they are being rewarded for growth. VCs look like they might get out profitably through the IPO process, but will investors have the same experience? 

Also if the markets take a shit for whatever reason, I'm guessing Lyft will get hit disproportionately hard.

Edited by Blotto

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15 hours ago, CooterBrown said:

I don’t get how Uber and Lyft aren’t profitable. You host a fucking app and contractors do all the real work. They don’t get paid by you until you’ve already been paid and skimmed your share.

they have a giant, bloated HR department filled with all sorts of non-contributors, like a lot of Silicon Valley unicorns

Edited by SwanderedTalent

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Not a start up but an interesting IPO.

WME - William Morris Endeavor - going public later this year.  Top Hollywood talent agency that also owns IMG, UFC, Pro Bull Riding and other stuff.

Will be an interesting valuation to watch.

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I was at Uber when Travis was still the CEO. The thing that's challenging for them is... even with a 20-25% take from a typical fare, only maybe 1% profit is left after they account for all the expenses. Cost a lot of money to pay for all the engineering talent to build the app, support the drivers, other typical business expenses, etc..

Don't know what the new CEO's direction is but Travis was all about increasing profit by gaining efficiency via improved tech for driver/riders, process, and reducing the bonuses they have to pay out to drivers, free rides for customers, etc. At least Uber Eats is profitable for them so far. 

Edited by YChang

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Seems like the app platform has been built though.
I can see engineering expenses on R&d for future tech. But what they have now seems pretty stable. I guess driver turnover and onboarding is an issue

Also they are probably spending money lobbying and fighting city ordinance s

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Dow Chemical just spun from DowDuPont on Monday. Next up is Corteva on June 1st.  Some analysts expect Dow Chemical to get to $65 

Edited by EuroHorn

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Just now, Updawg said:

Didn't Dow and Dupont just merge? What are they spinning off?

They completed the merger in 2017.  However, the merger was based on realigning "like businesses" within the combined company then splitting/spinning the company into three publicly traded companies, i.e., Dow Chemical, Dupont, and Corteva.  Dow Chemical would be a material sciences company, Dupont would be a speciality products company, and Corteva would be an agriculture products company.

Dow Chemical is now trading under DOW.  Corteva spins on June 1st and at which point Dupont will be its own company.

 

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18 hours ago, Updawg said:

Seems like the app platform has been built though.
I can see engineering expenses on R&d for future tech. But what they have now seems pretty stable. I guess driver turnover and onboarding is an issue

Also they are probably spending money lobbying and fighting city ordinance s

marketing cost. battle with uber to take market share.

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They completed the merger in 2017.  However, the merger was based on realigning "like businesses" within the combined company then splitting/spinning the company into three publicly traded companies, i.e., Dow Chemical, Dupont, and Corteva.  Dow Chemical would be a material sciences company, Dupont would be a speciality products company, and Corteva would be an agriculture products company.
Dow Chemical is now trading under DOW.  Corteva spins on June 1st and at which point Dupont will be its own company.
 
Maybe they'll start low enough it won't matter, but ag is a rough industry right now. Corteva will not be a big-profit company for some time.

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Zoom may be worth watching. I’m seeing them everywhere. It’s about the best of the connectivity solutions I’ve seen.

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19 minutes ago, Buzzrock said:

Zoom may be worth watching. I’m seeing them everywhere. It’s about the best of the connectivity solutions I’ve seen.

Until cisco, etc buys them and fucks it up.

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On 4/2/2019 at 4:30 PM, pantone159 said:

I don't see driverless cars as fixing Lyft/Uber's finances. If we do make that switch, that means that Lyft/Uber have to finance those vehicles themselves, instead of having drivers that are desperate or bad at math do it for them. And how will more vehicles to handle surges work? Right now, the drivers finance that, when more decide to drive when they make more. With a driverless fleet, it will be up to Lyft/Uber to pay to have those extra vehicles available. I think a driverless world is likely a lot WORSE for Lyft/Uber than what we have now.

I envisioned that Uber or Lyft would partner with local companies (maybe regional or national) that would actually own the driverless vehicles.  Maybe even the car manufacturers themselves. That subcontractor also builds out a central location for repairs and refuel/recharge.  The downside of this model is that Uber then has to negotiate with the larger companies that are supplying the vehicles instead of 1000s of contractors.  

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3 hours ago, tucker said:

Any thoughts on PagerDuty? Seems like a real business. 

They looked great on day 1. It will be interesting to watch Pinterest and Uber this year as well.

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On 4/5/2019 at 9:18 AM, tucker said:

Until cisco, etc buys them and fucks it up.

Ain't that the truth. Webex is such a piece of shit these days. It seems like every couple weeks, something changes on the interface, causing me to search around for shit that used to be fairly intuitive. 

Edited by Blotto

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Zoom raised its IPO price range and could begin trading Thursday with $9 billion valuation

Lyft did the same given early investor demand, but given they are profitable I'd hope they wouldn't drop like Lyft.

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I used PagerDuty at my previous company and it's a great product. The UI is fantastic for being able to set up schedules and escalations. I could see them owning this space for a very long time.

Hate webex? Be glad your org wasn't suckered into using webex teams over slack.

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Zoom is a good tool, but at a $9 billion dollar market cap, that's a hard pass. These IPO valuations are comical.

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I used PagerDuty at my previous company and it's a great product. The UI is fantastic for being able to set up schedules and escalations. I could see them owning this space for a very long time.
Hate webex? Be glad your org wasn't suckered into using webex teams over slack.

Who is PagerDuty’s biggest competitor?

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On 4/16/2019 at 12:56 PM, Blotto said:

Zoom is a good tool, but at a $9 billion dollar market cap, that's a hard pass. These IPO valuations are comical.

That is what I said when Google came out and 12 months later.  

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If it was a hard pass for me at $9 bil market cap, it certainly is at $15 billion.

At the current market cap, they would need profits of around $170 million to get to a PE of 100. Their profits last fiscal year were $7 million on revenue of $300 million. 

When Cisco bought Webex about 10 years ago, they paid $2.9 billion for a similar company that made $50 million on revenue of $380 million. 

One additional interesting point I just read, although I'm  not sure how much relevance it will ultimately have. The vast majority of Zoom product development is done in China (over 500 developers). The US government is starting to fuck with Chinese technology companies like Huawei due to concerns about infrastructure security. Video conferencing running over code developed in China might be less appealing in the future. Hard to say.

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I don’t know the answers to a lot of those but I do know driver retention is a big issue. They advertise “life changing money” but it’s really more of a grind. There are a lot of costs involved and the drivers now get about 80 cents a mile or less depending on the city. Hard for them to really cut that any more considering it started around $2 a mile. They still have enough drivers but I will say quality has suffered. Seems like they are just trying to get by until they can use self driving cars.

Next time you are in an uber ask the guy how long he has been driving. Usually you will get 6 months or less. Not necessarily a problem as long as they can keep finding replacements.

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Chewy.com filed (owned by Petsmart)

WeWork also filed. This company is a sham, and I expect it to go bankrupt. 

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On 4/18/2019 at 3:14 PM, RollLeft said:

That is what I said when Google came out and 12 months later.  

Yep. They are valued that highly because of the chance of any one of these companies blowing up. 

If you have 10 tech companies in a barrel, and know that statistically, one of them is going to hit it VERY big, but you aren't sure which one, then one of them is going to be undervalued and the other 9 are going to end up being comically overvalued. 

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6 hours ago, tucker said:

Chewy.com filed (owned by Petsmart)

WeWork also filed. This company is a sham, and I expect it to go bankrupt. 

WeWork is one I can’t believe.   It’s the Scientology of workspace thought.  A cult that is bound to fully implode.  

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Acording to two people familiar with the listing.

The ride-hailing company sold 180m shares, giving it a fully diluted valuation of $82.2bn and raising $8.1bn, making it the biggest IPO by proceeds for a US technology company since Facebook, according to Dealogic.

However the price is below the $48.77 level at which it sold shares to private investors including Saudi Arabia’s Public Investment Fund three years ago.

Before it launched its IPO roadshow, Uber had told some holders of its convertible notes that it could price in a range of $48 to $55 a share, giving it a valuation of $90bn to $100bn.

But Uber pared back its pricing expectations this week amid a broader US markets sell-off and the poor share price performance of its main US rival Lyft.
 

 

https://www.ft.com/content/c464c66e-7294-11e9-bf5c-6eeb837566c5

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This UBER IPO is an absolute fucking train wreck.  Indicated to open at least $2 below the offering.  2+ hours in and not open yet 

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Getting closer to open. It has the characteristics of Facebook. Biggest IPO since Facebook and market makers are riding down the price a bit. Not sure which way this one swings but it looks like it’s slowly morphing into a live abortion.

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