Last Monday will go down in the books as a historic day for unicorn liquidity, as company after company dropped their IPO filings onto the internet for the world to read. It was great.
But this week is still managing a good grip of IPO news, with Wish announcing yesterday that it has filed privately to go public, and Bumble talking to bankers about a possible 2021 debut at a valuation of $6 to $8 billion, according to Bloomberg.
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If you are tired of IPO news, it’s going to be a tough few quarters — I doubt that we are done seeing tech and otherwise venture-backed companies file and go public in the United States. We’re going to be busy.
This morning I want to chat a bit about the Wish IPO and possible Bumble debut. We’ll collect a little of what we know on each and see how possible market comps are performing. It will be fun!
Wish, Bumble
Let’s start with Wish as it is closer to getting out the door by a few quarters.
Wish is a well-funded e-commerce company that has raised around $1.4 billion, according to Crunchbase data. It most recently raised $300 million in a Series H that valued it at around $11.2 billion last August.
Those are big numbers. Behind them, it appears, has been a history of quick revenue growth. According to Forbes, Wish generated $1.9 billion in 2019, double what it brought in the year before. Wish, the same article notes, takes a cut of purchases, so the number we’re discussing is not gross merchandise value, but net revenue.
Given the global shift toward e-commerce in 2020, Wish could be enjoying another year of growth, easily pushing its annual revenue run rate into the $2 billion range. EBay has a price/sales ratio of around 4x, but with Wish growing much more quickly, it can likely surpass that figure. So, you can eyeball the math and see that Wish will likely be able to defend its final private valuation, provided that its losses aren’t too steep.
That it raised $300 million last year implies, however, a cash burn that could dent enthusiasm for the company’s equity. But, we’re spitballing. The numbers will tell, but you can pencil a path to a valuation north of $10 billion, which would make the Wish debut a huge event.
If so, a grip of investors are going to profit. As our own Connie Loizos wrote yesterday, Wish is backed by “General Atlantic, GGV Capital, Founders Fund, Formation 8, Temasek Holdings and DST Global, among others.”
Then there’s Bumble. The dating app going public at a target valuation of $6 to $8 billion might seem high. But, as we’ve learned from Tinder, the dating game is big business. It was reported earlier this year that Tinder generated $1.2 billion in revenue during 2019. A huge sum. Presuming that a good chunk of it was recurring (Tinder offers subscription options, as does Bumble), you can quickly pencil a hefty valuation for the rival dating service.
Bumble, then, could be worth the money it is targeting. Of course, we have questions about churn and what the pandemic did to apps that some folks use for more IRL hanging out than virtual chatting, to say the least. But by the time Bumble would go public next year perhaps some of the COVID-19 impact on its business — whatever that turns out to be — will have cleared and we’ll have a better look at its business during normal times.
But that Bumble is planning on going public at all goes to show how mature the app market has become. Tinder doing more than $1 billion in revenue while Bumble intends to file means there’s enough demand in app markets to support two dating app IPOs. I doubt we would have guessed that 10 years ago.
As a closing thought, how are we going to keep all these IPOs straight in our heads? The pricing and trading news and analysis is going to be pretty thick if we have a few more filings in the next week or so, given the amount of work that each IPO will present to us. I’ll try to package up news and thoughts into smaller pieces, probably, so that I can keep the pair of us as informed as possible without boring either of us.
And, of course, we’re keeping our eyes on the earlier stages of the startup market as well. More soon when another company inevitably files!
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