With stock market volatility becoming the norm, many investors are now looking towards investing in IPOs. Getting in on the ground floor of a successful IPO can have a lot of advantages, as many successful companies end up undervalued during their first round.
Here are a few of the IPOs that investors are talking about in the coming year.
Airbnb has substantially disrupted the travel and hotel industry and has continued to relentlessly expand. Unlike its peers like Uber and Lyft, it’s been relatively without controversy in recent years, with just a few legal hiccups regarding regulations. Airbnb itself has become a type of real estate investment, and many have become accustomed to using and trusting the peer-to-peer service. More notably, Airbnb appears to actually have value, which sets it aside from many disruptive companies.
Slack has quickly become the leading communications platform for larger enterprises, creating an easily consolidated instant messaging and document sharing service for the purposes of collaboration. At the same time, Slack’s aggressive growth could be tempered in the years coming up by new initiatives such as MS Teams, a service that’s clearly intended to gun for the startup. MS Teams is integrated with the Microsoft Office ecosystem and consequently does have some advantages for those on a Windows-based platform.
WeWork has quietly been growing as many remote workers have found themselves in need of an office space. WeWork provides workers and small businesses with useful, usable spaces, and is becoming increasingly relevant for the new modern professional. Freelancers and entrepreneurs are able to take advantage of WeWork’s spaces, which are now available in a total of 502 locations.
Palantir is a behind-the-scenes data processing and analysis company founded by Peter Thiel. It has grown to a size of 2,000 employees since its founding in 2003. As a company that works closely with the U.S. Department of Defense, it is able to be seen as somewhat recession proof. Counter terrorism contracts mean that Palantir is likely to continue expanding.
With 250 million active users, Pinterest has been a bit of a sleeper hit. Pinterest is perfect for promoting visual media, which can range from infographics to fashion photos. Yet very few people talk directly about Pinterest because it’s a difficult service to monetize; there are few who actively advertise on Pinterest and its path to monetization is a little vague. This is the same issue that Facebook encountered during its own IPO, as its value started to fall as investors saw that active users didn’t necessarily translate to revenue.
Postmates is disrupting the meal delivery industry just as Uber and Lyft have disrupted the taxi industry. Postmates has rapidly expanded across the nation, making it easier for restaurants to deliver without their own delivery service.
However, Postmates also has a lot more competition than either Uber or Lyft, as many states have smaller, local delivery services to contend with. Even on a national level, there are services such as Uber Eats and Grub Hub which provide an identical service. Thus, Postmates is a little more risky as an IPO because its market is somewhat saturated.
Uber and Lyft
Though these companies have substantially different company cultures, their fates are inextricably linked. Lyft has gotten a boost in public perception after the onslaught of controversy at Uber, but neither company is currently profitable — and that could be a problem. Both Uber and Lyft are currently bleeding money as they fight over the same markets.
Further, increased regulations could decide the success of each business, but each business may also be able to pivot in new directions. In terms of diversification, Uber seems to have a foothold, expanding into territory such as Uber Eats. Lyft, on the other hand, seems to be the more stable business.
As you can see, many of the IPOs coming are tech-based disruptors, and, of course, these IPOs are not completely confirmed. Many companies are rumored to have an IPO coming up in 2019, but there may be delays if there truly is an upcoming recession.