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

affirm installment loan
  • 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.

Read the original article on Business Insider

‘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. 

Now read more markets coverage from Markets Insider and Business Insider:

US stocks dip as stimulus hopes waver and jobless claims hit 11-week high

Blank-check firm Silver Spike rallies 49% after merging with cannabis-tech platform Weedmaps

Deutsche Bank says you should own these 14 stocks set to be post-pandemic winners – including one that could rally by 67%

Read the original article on Business Insider

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

Airbnb Logo+ Stocks
  • 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.

Read the original article on Business Insider

DoorDash makes trading debut 78% above IPO price

DoorDash delivery driver courier brooklyn bike
  • DoorDash commenced public trading on Wednesday, opening at $182, which was 78% above its initial public offering price.
  • The food-delivery company raised roughly $3.4 billion with its initial public offering after pricing shares at $102 each on Tuesday.
  • The IPO kicks off a slew of debuts slated for December, including offerings from Airbnb and Wish-parent ContextLogic.
  • DoorDash trades on the New York Stock Exchange under the ticker “DASH.”
  • Watch DoorDash trade live here.

DoorDash commenced public trading on Wednesday, opening at $182, which was 78% above its initial public offering price. The stock is listed on the New York Stock Exchange.

The food-delivery company raised roughly $3.4 billion in its initial public offering, selling shares at $102 each. The final pricing exceeded its previously expected range of $90 to $95 per share, and gave DoorDash a valuation of roughly $34.2 billion. That sum handily surpasses the $15 billion valuation it achieved in the private market earlier this year.

DoorDash’s IPO marks one of the year’s biggest offerings and caps a historic year for public debuts. US listings already raised a record $156 billion in 2020, according to Bloomberg data. Airbnb and Wish-parent ContextLogic are still poised to enter the market this month, with the former set to begin trading on Thursday.

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

Overwhelming investor demand placed shares on track to open as high as $195 before trading began. Its ultimate opening level of $182 is more than double the $75 to $85 range DoorDash expected to price shares as recently as Thursday.

DoorDash’s debut establishes it as the highest-valued food-delivery company. The firm trades under the ticker “DASH.” 

While the coronavirus slashed sales across the US economy, stay-at-home orders led DoorDash to thrive through the pandemic. Third-quarter revenue leaped 268% from the year-ago period as a larger portion of Americans turned to food delivery services. 

Read more: Ron Baron earned a $4.2 billion windfall just from investing in Tesla. The legendary investor told us why he still expects a 30-fold return from Elon Musk – and shared the biggest lessons and mistakes of his career

The distribution of a coronavirus vaccine might cut down on deliveries, but soaring COVID-19 cases and reinstated lockdown measures stand to keep the company’s hot streak alive into 2021.

DoorDash climbed as much as 92%, to $195.50, on Wednesday. Goldman Sachs and JPMorgan served as the IPO’s lead underwriters.

Now read more markets coverage from Markets Insider and Business Insider:

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.

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

Stocks could stumble in early 2021 as investor sentiment surges past market fundamentals, Goldman Sachs says

Read the original article on Business Insider

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.

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

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.

Now read more markets coverage from Markets Insider and Business Insider:

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

Stocks could stumble in early 2021 as investor sentiment surges past market fundamentals, Goldman Sachs says

Emmet Peppers grew his accounts from $30,000 in 2010 to over $70 million this year. The newly minted hedge fund manager breaks down how he spotted early opportunities in Tesla, Facebook, and the COVID-19 market crash, – and shared one IPO on his radar.

Read the original article on Business Insider

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.”

Read more: Goldman Sachs says buy these 25 stocks it expects to pay big dividends that will keep growing over the next decade

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.

Now read more markets coverage from Markets Insider and Business Insider:

Market wizard Chris Camillo grew his trading account by $9.7 million in 2020. Here’s the simple strategy he’s using to mint millions.

The most effective stimulus bill will boost unemployment benefits and PPP in order to drive economic growth, JPMorgan says

One gauge of stock-market valuation has reached its highest point since the dot-com bubble – and exceeds levels seen before the 1929 crash

Read the original article on Business Insider

DoorDash is the ‘most ridiculous IPO of 2020’ and holds no value beyond bailing out private investors, a veteran equities analyst says

doordash dasher courier delivery 6
  • DoorDash is set to go public on Tuesday, but one stock analyst cautioned investors against buying into the food-delivery startup.
  • “We think this proposed public equity offering holds no value, $0, beyond bailing out private investors before unsuspecting public investors realize ,” David Trainer, the founder and CEO of New Constructs, said in an email.
  • Trainer said he was concerned that it took a global pandemic for the company to turn a profit.
  • Though revenue grew by 268% year-over-year in the third quarter, DoorDash might not be profitable in the future, especially after a coronavirus vaccine sends more people back to restaurants, Trainer said.
  • Visit Business Insider’s homepage for more stories.

DoorDash’s initial public offering “holds no value,” and the company may never be profitable, said David Trainer, the CEO and founder of New Constructs.

The food-delivery startup upped its IPO price range to $90 to $95 a share in a filing on Friday after initially targeting $75 to $85. The new target means DoorDash is now seeking to raise as much as $3.1 billion in its public debut on Tuesday.

It could be one of the largest US tech IPOs of the year, though Trainer branded it “the most ridiculous IPO of 2020.”

The veteran Wall Street analyst said that DoorDash’s last private valuation was only $16 billion and that its pre-IPO stage reflected the “overblown fervor of the work-from-home theme.”

“We think this proposed public equity offering holds no value, $0, beyond bailing out private investors before unsuspecting public investors realize the business is not viable in its current form,” he said in an email.

Read more: Market wizard Chris Camillo grew his trading account by $9.7 million in 2020. Here’s the simple strategy he’s using to mint millions.

Trainer added that the company would need to grow its share of the competitive global food-delivery app market to over 56% from roughly 16% over the trailing 12 months to justify its valuation.

DoorDash’s revenue grew by 268% year-over-year in the third quarter of 2020, but Trainer cautioned investors against expecting further growth, especially if a swiftly deployed coronavirus vaccine sends people back into restaurants.

“It took a global pandemic to drive the firm’s one quarter (ended June 30, 2020) of GAAP profitability. The firm has not been profitable since, and we think it may never be,” he said.

Read more: Goldman Sachs says buy these 19 beaten-down stocks on its ‘holiday shopping list’ that are poised to break out in the 1st quarter of 2021

“Investors should take DoorDash’s GAAP numbers with a grain of salt,” Trainer added. “The company disclosed a material weakness in its internal control over financial reporting in its S-1. This disclosure means DoorDash didn’t have adequate technology and processes in place to ensure the accuracy of its financial statements and increases the odds that DoorDash will need to restate its financials in the future.”

Trainer also pointed out that DoorDash publicly filed for its IPO on November 13, a few days after Pfizer announced its vaccine was found to be over 90% effective at preventing COVID-19.

“We think DoorDash’s current investors and bankers recognize that the window of opportunity to IPO this terrible business closes quickly when the threat of COVID-driven lockdowns no longer drives growth in food delivery demand,” the analyst said.

Read more: A stock chief at BlackRock, the world’s largest asset manager, talked to us about what’s next in 2021 for the biggest market winners – and explained why energy and retail are poised for a comeback

Read the original article on Business Insider

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

GettyImages 890393836
  • 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.”

Read More: Goldman Sachs says buy these 19 beaten-down stocks on its ‘holiday shopping list’ that are poised to break out in the 1st quarter of 2021

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.

Read More: Billionaire investor Ray Dalio breaks down how US debt and money-printing binges have formed a ‘classic toxic mix’ that could set it on a downward spiral towards revolution and civil war

Read the original article on Business Insider