2019 is shaping up to be the year for unicorn IPOs. Uber, Lyft, Pinterest, Slack, and Postmates are among those private companies valued at $1 billion or higher that have already filed registration documents with the Securities and Exchange Commission, confidentially or otherwise. Those companies alone represent over $100 billion in private value expected to come to public markets.
Unicorns represent a unique asset class for potential investors. Though these companies boast large market caps, they still need to convince investors that they can sustain their high growth rates and limit their typically significant losses.
Lyft will go public Friday and will likely set tone for others. After a three-month drought in unicorn IPOs, partially because of the government shutdown, Lyft’s IPO will likely serve as a litmus test to see how the public markets value these high growth/high risk firms.
If we follow the signals, things look promising for Lyft. Reuters reported last week Lyft’s IPO was already oversubscribed after only two days on its roadshow. This high demand suggests two things: Lyft’s final IPO valuation could exceed the upper-range $23 billion implied in its latest S-1 amended filings, and investors demand for late-stage tech companies seems robust.
We’ll continue to monitor Lyft as the company completes its journey to becoming a public company this week. But the story certainly won’t end Friday as Lyft’s IPO performance will likely impact other unicorns edging towards an IPO.
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