Bumble climbs 9% following its 64% post-IPO rally

Bumble IPO Nasdaq
Displays in Times Square outside the Nasdaq MarketSite are pictured as dating app operator Bumble Inc. (BMBL) made its debut on the Nasdaq stock exchange during the company’s IPO in New York City, New York, U.S., February 11, 2021.

  • Bumble climbed as much as 8.8% on Friday, extending the post-IPO pop that began the session prior.
  • The dating app raised $2.2 billion in a Wednesday IPO selling 50 million shares for $43 each.
  • Strong demand for the offering led shares to spike 64% into Thursday’s close.
  • Watch Bumble trade live here.

Bumble rose as much as 8.8% on Friday, extending gains after its massive post-IPO rally.

The dating app made its trading debut Thursday afternoon and quickly surged as investors rushed to the offering. Bumble stock gained as much as 85% at intraday highs and closed roughly 64% above the offering price of $43 a share.

The company raised $2.2 billion on Wednesday with its 50-million-share offering. Bumble’s offering price was upsized twice since filing for its IPO in January: once from its initial range of $28 to $30 a share, and again to $37 to $39 a share.

Bumble now trades on the Nasdaq with the ticker “BMBL.” It closed with a market cap of roughly $7.7 billion on Thursday.

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The company reported having about 42 million monthly active users across its dating apps as of September 30. About 2.4 million of those users paid for premium features such as Bumble Boost or Bumble Premium, according to a regulatory filing. Apart from the app of the same name, Bumble also owns Badoo, another location-based social discovery app.

CEO Whitney Wolfe Herd told CNBC on Thursday that Bumble aims to convert more of its users to paying subscribers through investments in monetization features and new products. Wolfe Herd made history on Thursday by becoming the youngest female founder to take an American company public.

The market debut also brings a new option for investors looking to bet on online dating. Match Group – which owns Tinder, Hinge, Match, and other services – was previously the only major dating service to trade publicly. Match closed Thursday with a market cap of $45.8 billion.

Bumble closed at $70.31 on Thursday.

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BMBL

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Car-rental app Turo aims to list shares publicly in 2021, report says

andre haddad turo ceo
  • Car-rental startup Turo aims to list its shares publicly in 2021 after a strong end to 2020, the company’s CEO told The Wall Street Journal in a report published Friday.
  • Turo allows people to offer their private vehicles for rental, a car-sharing alternative to industry giants such as Hertz or Avis.
  • CEO Andre Haddad isn’t yet sure whether the company will pursue a traditional IPO or an alternative like a blank-check-company merger, according to The Journal.
  • The startup slashed costs and laid-off workers in 2020 to shore up extra cash. Those actions helped the company cut its second-half loss to $7.2 million, down from $46.9 million in the second half of 2019.
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Turo – a car-sharing app – plans to publicly list its shares in 2021 following a strong 2020 performance, The Wall Street Journal reported on Friday.

The startup ended 2020 in a healthy financial position despite the coronavirus pandemic. Layoffs and slashed marketing costs extended Turo’s cash runway by three years, and the company reported its first profitable quarter in 2020, according to the report. Turo CEO Andre Haddad expects the company to turn a full-year profit in 2022.

Turo’s website allows users to rent their own cars, whether they’re compact sedans or high-powered supercars. Those looking to rent private vehicles can then select from Turo’s marketplace instead of offerings from a legacy company like Hertz or Avis. Turo takes a cut of rentals’ revenue. 

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Haddad told The Journal he is undecided on whether the company will raise capital with a traditional IPO or pursue an alternative method for listing shares. Direct listings, in which companies list shares without raising any capital, have grown increasingly popular with tech companies.

Merging with a blank-check company could also take Turo shares public. Special-purpose acquisition companies flourished in 2020 and drove record levels of IPO fundraising throughout the year. The companies raise cash through public offerings and use those funds to acquire a private firm. The merged entity then trades publicly.

Turo projects to reach a record $153 million in sales for 2020, according to The Journal. Losses in the second half of the year are estimated to fall to $7.2 million down from $46.9 million in the second half of 2019. Second-half revenue is set to land roughly 7% higher from the year-ago period too, The Journal reported.

Some of the company’s improved performance can be tied to the pandemic and its effect on travel. With air and cruise travel hit hardest by the health crisis, car rentals offered one of the few methods to get away from home in relative safety. The private-rental marketplace might also receive a boost from a pickup in auto sales through the pandemic.

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‘It’s silly season’: Airbnb and DoorDash’s IPO rallies signal return of dot-com-era greed, strategists say

Airbnb IPO
The Nasdaq digital billboard in Times Square in New York on December 10.

  • Airbnb’s and DoorDash’s massive debut rallies suggest the IPO market is getting ahead of itself, top strategists said Thursday.
  • Airbnb spiked 115% when it began trading publicly for the first time on Thursday. DoorDash closed 86% higher in its Wednesday debut.
  • The first-day climbs revealed “euphoria and greed” last seen in the market during the dot-com bubble of the late 1990s, Paul Schatz, the president and chief investment officer of Heritage Capital, said.
  • “It’s silly season,” and investors need to differentiate between “a great company and a great price or value,” Rich Steinberg, the chief market strategist at the Colony Group, told Business Insider.
  •  Visit the Business Insider homepage for more stories.

Airbnb’s and DoorDash’s colossal post-IPO pops reveal unsustainable euphoria in the stock market, top strategists said.

Some of the year’s biggest initial public offerings took place this week, adding to an already record year for market debuts. DoorDash soared 86% when it began trading on Wednesday after raising $3.2 billion through its offering the day prior. Airbnb leaped 115% when it began trading Thursday afternoon, pushing its market cap above $100 billion and raising $3.5 billion.

The first-day rallies, while extraordinary, show “euphoria and greed” that’s likely not been seen in the stock market since the dot-com bubble of the late 1990s, Paul Schatz, the president and chief investment officer of Heritage Capital, said. Many investors are rushing to the new stocks, wanting to get in at any price, but such massive IPO bounces usually give way to similarly outsize losses, he added. 

“It’s silly season,” Rich Steinberg, the chief market strategist of the Colony Group, told Business Insider. “Investors need to distinguish the difference between a great company and a great price or value.”

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Both strategists attributed some of that euphoria to the near-zero interest rates expected to stay put over the next three years. The Federal Reserve’s plan to hold rates at record lows leaves investors with fewer places to put their money, as the policy suppressed Treasury yields early in the pandemic. The Fed’s backstop of the corporate credit market placed similar pressure on bond yields.

The combination of near-zero interest rates, a “tsunami of liquidity,” and hundreds of billions in unallocated investor cash fueled the two buying sprees, Schatz said.

The week’s booms might be only the start. Investors could face “complete and utter mania” across the IPO market in the first half of 2021 as more firms look to tap the market while demand remains strong, the Heritage Capital president said. Investors should avoid trying to time such volatile debuts and instead be patient until stock prices better reflect firms’ fundamentals, he added.

“Being the last guy buying the opening of a hot IPO, at the height of this speculative excess in some of these names, typically does not end well,” Steinberg said. 

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Legendary investor Jeremy Grantham made an accidental $265 million profit on a SPAC deal after previously criticizing blank-check companies

Jeremy Grantham
  • Jeremy Grantham’s early stake in battery producer QuantumScape has surged following the firm’s merger with a special-purpose acquisition company, but Grantham still isn’t sold on the blank-check IPO trend.
  • Grantham invested $12.5 million into the company seven years ago. That stake now stands at roughly $278 million thanks to a SPAC merger and QuantumScape’s subsequent stock rally.
  • The position is “by accident the single biggest investment I have ever made,” Grantham told the Financial Times.
  • Still, the investor sees SPACs as a “reprehensible instrument, and very very speculative by definition,” largely due to their lack of listing requirements and overall regulation.
  • Visit the Business Insider homepage for more stories.

The very kind of dealmaking that Jeremy Grantham previously deemed “reprehensible” netted the famous investor a $265 million profit.

Grantham, who founded investment management firm GMO and serves as its long-term investment strategist, invested $12.5 million in battery producer QuantumScape seven years ago as one of several stakes in early green-tech companies, according to the Financial Times. The position swelled after Kensington Capital Partners announced plans to merge QuantumScape with a special-purpose acquisition company, or SPAC, in September.

The deal valued QuantumScape at $3.3 billion, and shares traded at more than four times their listing price when the acquisition was completed on November 30. The company’s stock rallied another 31% on Tuesday alone, valuing Grantham’s stake at roughly $278 million.

Yet the legendary investor isn’t convinced Wall Street’s SPAC frenzy will last. The QuantumScape position is “by accident the single biggest investment I have ever made,” Grantham told the FT, partially fueled by the so-called blank-check companies’ lack of regulation.

“It gets around the idea of listing requirements, so it is not a useful tool for a lot of successful companies. But I think it is a reprehensible instrument, and very very speculative by definition,” he added.

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Grantham’s profit stands to climb even higher. QuantumScape soared as much as 37% in early Wednesday trading. Should the rally hold into the market close, it would add another $100 million to his total gains. 

SPAC firms raise capital through an initial public offering with the intention of using the cash to acquire a firm and take the merged entity public. The last two years have seen market favorites including Virgin Galactic, DraftKings, and Nikola go public through such deals.

Blank-check IPOs exploded in 2020 as firms looked to take advantage of a surge in participation from retail investors and hopes for an economic recovery. More than $74 billion has been raised across 218 SPAC debuts in 2020, according to data from SPACInsider.com. That compares to just $13.6 billion raised across 59 deals in 2019.

Wall Street’s obsession with the vehicles could be a sign of unsustainable market optimism, Grantham told the FT, rivaling the overwhelming bullishness seen during the 1920s and the late-1990s tech bubble.

Tesla’s meteoric rise through the year has made electric-vehicle SPACs – and any SPAC related to the EV market – particularly popular. QuantumScape lands in that basket. The firm produces solid-state batteries used in electric cars and has backing from industry giant Volkswagen.

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DoorDash prices IPO at $102 per share, will raise $3.4 billion

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DoorDash prices IPO at $102 per share, will raise $3.4 billion

doordash delivery driver
  • DoorDash priced its shares at $102 apiece on Tuesday ahead of its IPO, CNBC’s Leslie Picker reported. That comes in well above the expected range.
  • The offering is expected to raise $3.4 billion, and it gives the food-delivery company a valuation of $32.4 billion.
  • DoorDash lifted its pricing range on Friday to $90 to $95, from $75 to $85. Its new pricing sets the company up to be one of the year’s biggest debuts.
  • DoorDash is set to trade on the New York Stock Exchange under the ticker “DASH.”
  • Visit the Business Insider homepage for more stories.

DoorDash priced its shares at $102 each on Tuesday ahead of its highly anticipated initial public offering, CNBC’s Leslie Picker reported. The final pricing comes in well above the expected range.

That pricing will allow the company to raise $3.4 billion when it begins trading on Wednesday, according to a regulatory filing. It also gives the firm a $34.2 billion valuation, based on common stock outstanding, and $38.7 billion on a fully-diluted basis. It will mark one of the year’s largest market debuts.

The pricing brings DoorDash well above the roughly $15 billion private valuation it achieved earlier in 2020, which was already a major increase from the $1.4 billion it was worth in 2018.

DoorDash is poised to become the highest-valued food-delivery company when it debuts on the New York Stock Exchange. The company is set to trade under the ticker “DASH.”

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DoorDash lifted its IPO price range on Friday to $90 to $95, from $75 and $85 per share. Its latest target sets it up to be among the year’s five largest offerings.

IPOs from DoorDash, Airbnb, Wish-parent ContextLogic, and others are set to drive the busiest December on record for public offerings. US listings have already raised a record $156 billion in 2020, according to Bloomberg data, partially fueled by the year’s blank-check frenzy.

Goldman Sachs and JPMorgan will serve as the offering’s lead underwriters.

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Airbnb plans to hike its IPO price and could target a $42 billion valuation, report says

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  • Airbnb is raising the pricing range for its initial public offering to between $56 and $60 per share, the Wall Street Journal reported.
  • The home-rental platform was previously targeting a range of $44 to $50 a share.
  • The increased range means Airbnb could raise as much as $3 billion during its stock-market debut on December 10.
  • Both DoorDash and Airbnb are aiming to raise over $3 billion this month, putting them among the biggest IPOs of 2020. 
  • Visit Business Insider’s homepage for more stories.

Airbnb intends to increase the price range for its initial public offering this week to between $56 and $60 per share, according to the Wall Street Journal

It previously planned to sell shares for $44 to $50 each, meaning its new range represents a 27% increase at the bottom end and a 20% increase at the top end. The US-based home-rental company could inform investors of its updated pricing range in a public filing Monday.

Airbnb intends to sell 50 million shares via its public offering scheduled for December 10. At the top end of the new range, it would raise up to $3 billion. That would set it up for a fully diluted valuation of $42 billion, which includes securities like options and restricted stock units. 

Airbnb will list on the Nasdaq under the ticker symbol “ABNB.”

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The targeted valuation is more than double Airbnb’s most recent private valuation of $18 billion in the early weeks of the pandemic in April. It’s also a significant premium to the $31 billion price tag it secured during a fundraising round in 2017.

Food delivery firm DoorDash also upped its IPO pricing range last week. The San Francisco-based company plans to sell 33 million shares at between $90 and $95 per share, up from a prior target of between $75 and $85 per share.

DoorDash’s IPO is slated for December 8 while its trading debut on the NYSE is set to follow the next day.

The two startups aim to raise a combined $6.2 billion at the top end of their pricing ranges. This would mark a record high for December’s IPO volume, exceeding the $8.3 billion record set in both December 2001 and 2003, according to data compiled by Bloomberg.

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