In Focus: 2019 IPOs Part II
Updated: Sep 14, 2019
Thanks for checking out this week's In Focus, our look into a company, companies, or markets that made the Wall Street news cycle. This week we bring Lyft and the other potential 2019 IPOs into focus.
March 29, 2019 marked the public debut of Lyft and boy was it ehhh. The buildup was exciting though. Initially priced in the $60s, the IPO was oversubscribed and the price was raised to between $70 and $72 a share, finally landing on $72 per share.
The stock hit the public market at 11:48 AM trading at $87.24 per share, it quickly traded to over $88 per share, but then it slowly faded the day away closing out the day at $78.29.
Not What I Expected or Didn't Expect
As I watched Lyft trade on a one minute chart I wasn't surprised that it wasn't heavily accumulated, especially after Warren Buffett's CNBC interview on Thursday. Where when asked about Lyft's IPO, he politely inferred that there was better value out there for $25 billion (Lyft's valuation pre-IPO). I think this was the mindset of many investors on Friday March 29, 2019.
The Other Unicorns
On January 13, 2019 I published a first look at the 2019 IPOs, and the list above was from that first In Focus article. Of the 11 names on the list only Lyft has gone public, and the first quarter of 2019 is finished. What does this mean? It means the names of this list have left themselves little breathing room, and we'll likely see half of these names go public in 2020 instead of 2019.
Lyft's IPO didnt exactly suck all of the money out of the room, but we're only one day in, investors could pile into Lyft next week. The companies on this list don't want to come out back-to-back-to-back, there just isn't enough money to support them all. A company like WeWork could get lost in the shuffle if it were to come out to close to an Uber or AirBnb IPO.
What I think is most likely to happen is that Pinterest, Uber, and AirBnb will go public in 2019 and the rest of the names on this list will look at 2020 for their offerings. With the way the market has increased since the beginning of 2019, some of the smaller companies on the list missed a great opportunity to get in early before the bigger names, and ride the tide of the market (hindsight is 20/20).
Are You a Believer?
The lesson here is patience if you're not a Lyft believer. There's no need to jump into a new offering just for the sake of getting involved in a new offering. If you are a believer that Lyft is worth a lot more than $26 billion then this is your time to buy.
But to help you make the decision, here are a few companies and their current market capitalizations for comparison in random order. These are just a few companies I keep an eye on. FedEx (FDX) $42 billion, eBay (EBAY) $34 billion, Ford (F) $35 billion, General Motors (GM) $52 Billion ,Under Armor (UAA) $8 billion, Square (SQ) $31 billion, Kraft Heinz Co (KHC) $39 billion, Kelloggs (K) $20 billion, Canopy Growth Corporation (CGC) $15 billion.
I'll be on the sidelines for now on Lyft. I had a value in my head for the company, and the top of that value was $25 billion.
This is where I leave you, with a pick'em. If you love Lyft and think its value is much higher than $26 billion, then invest away.