Author: Dan Caplinger | May 09, 2019
IPOs are hotter than ever
Initial public offerings give investors the chance to get in on the ground floor of some amazing business opportunities, and lately, the IPO market has been red-hot with exciting new companies seeking financing. Let's look more closely at some of the most promising IPOs this year to see how newly public companies are doing and what's left in the pipeline for later in 2019.
In the eyes of many investors, Lyft (Nasdaq: LYFT) has been one of the most unsuccessful IPOs so far in 2019. Having come public at $72 per share, Lyft stock has fallen, causing losses for those who participated in the initial public offering. Yet many still see the money-losing ride-hailing service as having plenty of future potential -- especially if autonomous driving technology allows it to ditch drivers and replace them with company-owned vehicles.
Pinterest (Nasdaq: PINS) got a much more favorable reaction from investors when it went public, climbing 28% on its first day of trading from its IPO price of $19 per share and continuing to ascend from there. The social media company has wowed investors by steering clear of drama and allowing users to showcase their wares and interests freely, and many expect monetization efforts to be fruitful over the long run.
3. Levi Strauss
Not every successful IPO involves technology companies. Levi Strauss (NYSE: LEVI) came public at $17 per share, exceeding initial indications to come out at $14 to $16, and quickly soared 32% on its first day of trading. The iconic jeans maker has unrivaled brand presence around the world, and bullish shareholders see plenty of potential for Levi's to take advantage of its value to extend its reach across the globe.
4. Zoom Video Communications
Zoom Video Communications (Nasdaq: ZM) has been one of the most rewarding IPOs to date in 2019, giving investors an 80% jump on the first day of trading and climbing further from there. With the promise of offering users a superior experience in coordinating video teleconferencing and related services, investors have jumped onto Zoom's bandwagon, especially given its potential to collect recurring revenue from enterprise users of all sizes.
5. Beyond Meat
The most recent new IPO in 2019 is Beyond Meat (NYSE: BYND), which rocketed to gains of more than 160% in its first day of trading. The company promises that its plant-based meat substitutes will transform the meat processing industry, with alternatives it bills as healthier and more sustainable than beef, pork, and chicken. Some see the hype as being overblown, but there's no doubt that consumers are looking for healthy options, and Beyond Meat hopes to capitalize on that trend.
Among IPOs expected in 2019 but not yet having taken place, one of the most anticipated is Uber. As Lyft's larger competitor, the ride-hailing service was once seen as potentially carrying a $100 billion market capitalization. But after Lyft's lackluster performance, Uber has toned down expectations -- yet still expects to be much bigger than its rival.
Brokerage company Robinhood also hopes to come public during 2019, with hopes that its app-based platform that's captured the attention of millennial investors will bring demand from would-be IPO shareholders. Known primarily for its free services, Robinhood recently announced a premium subscription-based service to woo those seeking enhanced investing tools and other features. That could help produce more revenue to make Robinhood's growth prospects clearer to investors.
8. WeWorkThe gig economy has forced freelancers to think outside the box when it comes to where they house their businesses. For those who need something outside their homes, WeWork's shared office spaces are a valuable resource that's become increasingly popular. The company hopes to raise cash to further its growth efforts, and with well-known institutions having made early investments, WeWork has a favorable reputation that few private companies share.
Office productivity tools have always been valuable, but Slack has taken business communications to the next level. The chat-based messaging platform caters to enterprise customers, offering ways to let workers interact with each other more effectively. Slack hopes to use a direct listing to go public rather than a traditional IPO, but the net result will still be for investors to get access to shares of the enterprise messaging business.
Finally, Airbnb has revolutionized the accommodations industry, allowing homeowners to offer their properties to travelers as an alternative to traditional hotels and vacation rental services. As it goes beyond simple listings, Airbnb hopes to produce video content to support and promote its core business. Hotel companies are fighting back with their own similar services, but many users still turn to Airbnb first for convenient and affordable places to stay.
Keep an eye on IPOs
We've already seen several promising IPOs take place in 2019, and some others are right around the corner. You don't necessarily have to participate in an IPO to profit from these companies, but it is important to understand why their businesses are generating so much buzz as their shares come public for the first time.