The $171 billion of US IPOs in 2021 is already a full-year record

Coinbase IPO
  • Initial public offerings in the US this year have already broken 2020’s record with six months still go in the year.
  • Sky-high valuations in the stock market thanks to stimulus packages and the Federal Reserve’s low interest rate policies are driving the boom.
  • By the end of 2021, US IPOs could potentially raise a staggering $250 billion-$300 billion.
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Initial public offerings in the US this year have already broken 2020’s record with six months to go.

In the first half of this year alone, IPOs have raised $171 billion, surpassing last year’s record $168 billion, according to Reuters, citing data from Dealogic.

The average one-day gain for IPOs this year is 40.5% versus the 28.2% during the same period in 2020 and 21.7% in 2019, the report said.

Furthermore, the average one-week return this year is 35.7%, an increase from 2020’s 32.2% and 2019’s 25.5%.

This doesn’t come as a surprise with this year’s blockbuster IPO including South Korean e-commerce firm Coupang, which has raked in $67 billion, cybersecurity firm Darktrace, and cryptocurrency exchange Coinbase Global.

There is a slew of hotly anticipated IPOs still to come, with upcoming debuts by payments giant Stripe, Chinese ride-hailing firm Didi Chuxing, and trading platform Robinhood, among others.

Among the many factors driving the surge in companies going public, from traditional IPOs to SPACs, is the heady valuation of the stock market due in large part to the flush of stimulus packages passed during the pandemic and the Federal Reserve’s low interest rate policies.

“Five-hundred million used to be a pretty big IPO,” Jeff Bunzel, global co-head of equity capital markets at Deutsche Bank told Reuters. “Nowadays everything seems to be in the billions or three-quarters of a billion-plus. So there’s really been an explosion in the size of transactions as well.”

By the end of 2021, US IPOs could potentially raise a staggering $250 billion-$300 billion or more, data from Dealogic showed.

Meanwhile, SPACs, a popular route to public markets used by many startups, have boomed as well.

In 2020, a total of 248 SPACs raised $83.3 billion according to SPAC Analytics. But 2021 data already shows 340 SPACs have raised $106 billion just six months into the year.

Read more: Bank of America flags 26 stocks to buy that are also hugely popular among giant Wall Street investors

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Wish falls as much as 16% below IPO price in trading debut after raising $1.1 billion

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  • Wish parent company ContextLogic fell as much as 14% in its trading debut on Wednesday, giving the e-commerce company a market valuation of about $15 billion.
  • The company raised $1.1 billion when it priced its IPO at $24 per share, giving it an initial market valuation of $17 billion on a fully diluted basis.
  • An IPO frenzy has quickly materialized in the fourth quarter of 2020, given the eye-popping surge in recent trading debuts for Airbnb, DoorDash, and C3.ai. 
  • Watch Wish trade live here.

Wish parent company ContextLogic fell 5% at the open of its trading debut on Wednesday, giving the e-commerce company a market valuation of about $15 billion on a fully diluted basis.

The stock opened at $22.75 and hit an intraday low of $20.05, representing a decline of 16% from its initial public offering price of $24.

Wish priced its IPO at $24 per share, raising $1.1 billion in proceeds at a valuation of $17 billion. That’s well ahead of the company’s last fundraising round as a private company in August 2019, when the firm raised $300 million at a valuation of $11 billion.

Wish was created by former Google engineer Piotr Szulczewski. The e-commerce platform relies on a personalized visual browsing experience rather than the traditional search and go shopping habits facilitated by a search bar.

Wish’s catalog has grown to more than 150 million items, and it sells nearly 2 million items per day, according to its S-1 filing. The company did $1.9 billion in revenue in 2019 and is not yet profitable.

Wish’s IPO debut and subsequent decline is the opposite of high flying public debuts this quarter. Last week, Airbnb, DoorDash and C3.ai posted substantial gains of 113%, 86% and 174%, respectively. And in September, Snowflake completed the largest software-technology IPO in history and has been on a tear since its debut.

Read more: Fund manager Brian Barish has returned more than 550% to investors over 2 decades, and he just had 2 of his best years ever. He told us how he did it – and 3 top picks for the next 5 years.

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Wish reportedly prices IPO at $24 per share, will raise $1.1 billion at a valuation of $17 billion

Peter Szulczewski
  • Wish parent company ContextLogic priced its shares at $24 each on Tuesday ahead of its IPO, Bloomberg first reported.
  • That’s at the top end of Wish’s previously expected IPO pricing range of $22 to $24 per share.
  • The offering is expected to raise $1.1 billion in funds for Wish, giving the e-commerce platform a valuation of $17 billion on a fully diluted basis, according to Bloomberg.
  • Wish will trade on the Nasdaq exchange under the ticker symbol “WISH.”
  • Visit the Business Insider homepage for more stories.

Wish’s parent company ContextLogic priced its shares at $24 each on Tuesday ahead of its initial public offering, Bloomberg first reported.

The final price came in at the top end of its previously expected range of $22 to $24.

Wish’s IPO will raise as much as $1.1 billion in funds for the company, giving it an initial valuation of $17 billion on a fully diluted basis, according to Bloomberg. The e-commerce platform will trade on the Nasdaq exchange under the ticker symbol “WISH.”

In its last private funding round led by General Atlantic in August 2019, when the San Francisco-based company raised $300 million, Wish was valued at $11 billion. The firm had a near $9 billion valuation in late 2017. 

The company has raised a total of $2.1 billion in private funding since its founding in 2010, according to data from Crunchbase.

Read More: Shark Tank investor Kevin O’Leary told us 2 concrete strategies for building wealth over time – and shared how a rude awakening during the pandemic led him to build a new investing app

Wish was created by former Google engineer Piotr Szulczewski. The e-commerce platform relies on a personalized visual browsing experience rather than the traditional search and go shopping habits facilitated by a search bar.

Wish’s catalog has grown to more than 150 million items, and it sells nearly 2 million items per day, according to its S-1 filing. The company did $1.9 billion in revenue in 2019 and is not yet profitable.

Wish will forge ahead with its IPO, unlike Roblox and Affirm, who both postponed their previously planned December IPOs following the strong showings by DoorDash and Airbnb.

According to Bloomberg data, US listings have already raised a record $156 billion in 2020, in part fueled by the rise in blank-check special-purpose acquisition companies.

Lead underwriters of the offering include Goldman Sachs, JPMorgan, and Bank of America.

Read more: From Wall Street heavyweights to boutique investment firms, we break down what 7 fund managers and market strategists think about Brexit as the ‘midnight hour’ approaches.

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Affirm joins Roblox in delaying its planned 2020 IPO after monster gains from Airbnb, Doordash

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  • Affirm is delaying its planned IPO until next year, making it the second company in days to put their public debut on hold, according to The Wall Street Journal.
  • The move comes shortly after Roblox decided to postpone its planned 2020 IPO until next year to seek a higher price, given the strong investor demand for high-growth tech IPOs.
  • The recent IPO frenzy has been accelerated by the strong trading debuts of Airbnb and DoorDash earlier this week.
  • Visit Business Insider’s homepage for more stories.

Affirm’s planned 2020 IPO has been put on hold until next year, The Wall Street Journal reported on Saturday, citing people familiar with the matter.

The point-of-sale lender’s decision to postpone its IPO comes shortly after Roblox decided to postpone its planned 2020 IPO until next year to seek a higher price, given the strong investor demand for high-growth tech IPOs.

Affirm planned to begin pitching its shares to potential investors this coming week, and was on track to receive a market valuation of as much as $10 billion, according to The Journal.

Read More: 2 investment chiefs at John Hancock’s $692 billion investing arm say the post-COVID recovery might disappoint in 2021 – but investors can profit with these 3 strategies

Part of the reason Affirm delayed its offering was due to the high price spikes in recent offerings from Airbnb and DoorDash, as well as delays at the Securities Exchange Commission due to a surge in listing requests from private companies, the Journal reported.

Airbnb surged as much as 143% in its first day of trades on Thursday, while DoorDash closed higher by 86% in its first day of trading on Wednesday.

Now, Affirm’s public debut won’t come until January at the earliest, according to the report. 

Affirm and Roblox are attempting to strike a delicate balance of not leaving any money on the table by pricing their IPO at too low of a price, yet also not pricing their shares too high, which might lead to a weak trading debut. Meanwhile, both companies are hoping (and betting on) that the IPO window remains open early next year.

A steep correction in the stock market can occur at any time, closing the IPO window, as that’s not an ideal environment for a private company to go public.

BlackRock CEO Larry Fink believes the recent IPO frenzy is “unsustainable” and could lead to “many accidents.”

Read More: Cathie Wood is beating 99% of fund managers this year. The ARK CEO and her team share their outlooks for 2021 – including thoughts on Tesla’s $5 billion stock sale, the Salesforce-Slack tie-up, and bitcoin’s meteoric rise.

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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.”

Read more: 2 investment chiefs at John Hancock’s $692 billion investing arm say the post-COVID recovery might disappoint in 2021 – but investors can profit with these 3 strategies

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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Airbnb prices IPO at $68 per share, will raise $3.5 billion

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  • Airbnb priced its shares at $68 each on Wednesday ahead of its IPO, Bloomberg first reported.
  • That’s well above Airbnb’s previously expected IPO pricing range of $56 to $60 per share, which already marked an upsize from a prior range.
  • The offering is expected to raise $3.5 billion in funds for Airbnb, giving the company a valuation of $47.3 billion. Airbnb will trade on the Nasdaq exchange under the ticker symbol “ABNB.”
  • Visit the Business Insider homepage for more stories.

Airbnb priced its shares at $68 each on Wednesday ahead of its highly anticipated initial public offering.

The final price came in well above its previously expected range as heightened investor demand for the offering pushed the price higher. Airbnb initially priced the expected range of its IPO shares at $44 to $50, which was subsequently raised to $56 to $60.

Airbnb’s IPO will raise $3.5 billion in funds for the company, giving it an initial valuation of $47.3 billion. The firm will trade on the Nasdaq exchange under the ticker symbol “ABNB.”

In its last private funding round in April, when the home-sharing company raised $1 billion amid the pandemic, Airbnb was valued at $18 billion, representing a sizable cut to its 2017 valuation of $31 billion. The company has more than recouped that valuation cut in its IPO debut.

Read more: We spoke with Wall Street’s 9 best-performing fund managers of 2020 to learn how they crushed the chaotic market – and compile the biggest bets they’re making for 2021

Airbnb has led high-profile IPOs in late 2020, joining the likes of DoorDash and Affirm. While many expected the IPO to be closed shut in 2020 given the COVID-19 pandemic and volatile stock market that experienced as 35% decline earlier this year, a strong recovery in both stocks and investor confidence has reopened the IPO window for many high-profile private companies.

According to Bloomberg data, US listings have already raised a record $156 billion in 2020, in part fueled by the rise in blank-check special-purpose acquisition companies.

Morgan Stanley is serving as the lead underwriter for Airbnb’s debut. 

Read more: Morgan Stanley is warning that the stock market’s economic recovery trade may soon be over. Here are 4 strategies they recommend for finding the returns that still exist.

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