If you only stayed up to date with the Coinbase direct listing this week, you’re forgiven. It was, after all, one heck of a flotation.
But underneath the cryptocurrency exchange’s public debut, other IPO news that matters did happen this week. And the news adds up to a somewhat muddled picture of the current IPO market.
To cap off the week, let’s run through IPO news from UiPath, Coinbase, Grab, AppLovin and Zenvia. The aggregate dataset should help you form your own perspective about where today’s IPO markets really are in terms of warmth for the often unprofitable unicorns of the world.
Recall that we’re in the midst of a slightly more turbulent IPO window than we saw during the last quarter. After seemingly watching every company’s IPO price above-range and then charge higher on opening day, several companies pulled their offerings as the second quarter started. It was a surprise.
Since then we’ve seen Compass go public, but not at quite the level of performance it might have anticipated, and, then, this week, much has happened.
What follows is a minidigest of IPO news from the week, tagged with our best read of just how bullish (or not) the happening really was:
- UiPath’s first IPO price interval: Neutral to bearish. Though we anticipate that UiPath will set a higher IPO price interval before it begins to trade, that its first swing at-bat was a valuation cut of around $9 billion did not set our hearts aflame. And we could be wrong about it getting valued more richly before starting to trade.
- Coinbase’s direct listing: Pretty bullish. If Coinbase had set its reference price at a less obviously conservative price point, its post-debut gains would have been far smaller. But the company set a somewhat low reference price and thus looks brilliant. However, Coinbase’s valuation — now that it has had a few days to shake out — is generally tipped at around $60 billion to $65 billion by major financial websites. So, those fully diluted numbers that were floating around appear to have been a bit hot. Regardless, Coinbase managed to direct list a hugely profitable cryptocurrency exchange for a hugely positive repricing. That’s bullish, though not as bullish as some expected, at least in terms of its present value.
- Grab’s SPAC: Pretty bullish. That the Southeast Asian superapp is going public in the United States is neat. That it managed to find a SPAC to do the job was surprising. And that its SPAC-led debut will feature a $4 billion PIPE was very 2021. On the whole, given the company’s somewhat turbulent 2020 — see Uber’s 2020 results for more context — it has a strong growth plan ahead and an improving adjusted profit margin that could interest investors. And with a nearly $40 billion equity valuation, it’s a deal we have to pay attention to. It feels bullish given the scale of the deal, in addition to the fact that even exotic flotation methods are taking huge companies public, even if they call a different hemisphere home.
- AppLovin’s IPO pricing and initial performance: Neutral to bearish. This one surprised me. AppLovin, which works in the mobile app world, priced midrange and then saw its value drop. Its shares priced at $80 and closed their first day at $65.20. I don’t know why. Perhaps because the company intended to use its IPO proceeds to pay down debt? I chatted with its CFO yesterday — more to come in this weekend’s newsletter — but to see a tech company take this much stick, or simply be priced so incorrectly, was hardly bullish. (More from us on the company here.)
- Zenvia’s F-1 filing: Neutral, until we can figure it the hell out. Zenvia is a neat company, I reckon. Based in Brazil and backed by DLM Invista, The Brazilian Development Bank and Oria Capital, it raised more than $80 million while private, according to Crunchbase. It has a comically complex corporate structure, as well as a recent deal that is leading to even more pro forma numbers than we usually have to parse. I am somewhat bullish on it going public in the U.S. because the Brazilian customer experience company is a neat software issuance from the LatAm tech market. But I am too befuddled by its numbers to really say more than that. So we’ll go with neutral for now.
To sum up our notes, we have two bullish entries, two bearish and one that’s neutral. That implies a flat, if active, IPO market. Which feels fair, actually.
Perhaps the difference in the air is not that the IPO window is closing, or closed, but that it is simply more normal than before. If you’re in an environment where temperatures fall from extreme heat to being comfortably warm, you might feel the need to put on a sweater.
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