Ask HN: There are 5 S-1 posts on the front page, what explains the rush?
Is it just because the stock market is doing "well" right now or is there some other explanation?
I understand the stock market very poorly and had the same question myself, so this may be way off the mark, but I wonder if it's because of pessimism in the economy that non-public investors are harder to milk right now. It's unusual to see this many S-1's on HN, even more unusual that I've heard of most of them before.
Rather, individual businesses are evaluated on their own individual trajectories, physics, prospects, and teams. Many of these have done well in COVID times and have stories aimed at convincing investors that improved performance will continue- independent of, or in inverse relation to larger negative macro assessments.
I haven't read these S1s but am sure this is the case here.
There are also technical- financial technical, not technical technical- reasons that make one moment better than another for seeking capital, and now is "good" for certain kinds of companies. It is also lifesaving for others- like Kabbage being bought by Amex a couple weeks ago. Their business (I believe) has basically been destroyed by the pandemic so Amex was able to get a good deal.
You should just read the S1s. The stories they tell are in fairly straightforward language, amidst a lot of transparency and compliance gobbledegook. But if you know a little about the companies you can probably arrive at an opinion about their narratives.
Cheers.
Companies prefer to IPO when they show the strongest growth as it likely will lead to the highest valuation at time of IPO -- regardless of other fundamentals (such as profitability). These companies are likely doing very well for a combination of reasons: - Lockdown has increased use of their services - The market is in a large upswing right now
This makes their growth look phenomenal to investors, and likely, their board members who want to cash out see this as an opportunity.
There has been a bit of a "dead zone" for around the last year with people thinking the market was going to slow down for a recession and it has been considered hard to "raise money". A lot of people also believe a longer recession is still coming (I'm one of them).
This means that we likely have a short window where growth / income look fantastic for a few companies. The next opportunity might be in 2-3 years.
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Also, as an investor, I think this is terrible practice as I believe the fundamentals of the investment are far more important than black swan-type of events giving you a growth spurt.
Snowflake lost 350m last year
Unity lost 160m last year
Sumo Logic lost 43m last year
Jfrog lost 400k last year
Out of curiosity, is it normal for companies to IPO this far away from profitability, or is this a recent tech thing? I feel like it was a big deal when uber IPO'd so far away from profitability, now it seems standard.
I don't subscribe by this method.
Another thing to keep in mind is that IPOs are usually done for 1 of 3 reasons:
1) To allow an exit for investors
This means that you have to think you know more than their current investors do about their growth -- unless the investors have other specific timelines (sometimes they do), or else you're buying what someone else thinks is no longer a good use of capital.
2) To raise money
This means the company needs more cash, either for "growth" or because they will fail without it. Again, you should be certain that this company-in-need deserves more money.
3) To create a sense of "official-ness".
Some companies can be better respected in their industry and helps with their brand if they're public.
It's been reported that public CEOs often spend about 50% of their time working on matters that relate to simply being public. It's one of the reasons that Warren Buffett will sometimes take companies private after buying public ones -- to afford them more time and energy to work on the actual company. There's very little about going public that actually makes a company better.
It's a lot easier (for both sides!) to buy another company with your stock if there is more confidence in the valuation, that way everybody knows what they're getting (or giving away). One way to get a really, really solid valuation is to be publicly traded.
Like, as a casual observer, it seems more common to hear of companies losing money than making money these days, especially outside of FAANG.
You can employ 1000 people at 50k Euro a year plus infra without hitting these losses, and one on one thousand is surely to come up with something. Not that I'd jump to do that without having a revenue plan. Niche products of products burning a lot of cash doesn't make a lot of sense.
https://www.nasdaq.com/market-activity/ipos
If you start studying the capital markets you'll quickly learn just how little you've known about the economy before. Look at any object on your desk - know how was that thing made? Someone out there has manufactured the thing, there was a few if not a few dozen corporations involved.
I'd also add that this is just NASDAQ. There's a lot of other exchanges across the world.
https://en.wikipedia.org/wiki/2020_United_States_presidentia...