Silicon Valley is preparing for a slew of new initial public offerings, as some of the well known and most highly-valued technology startups will go public during the next year-and-a-half to two years.
According to a report in The New York Times citing investors, bankers and analysts, the expected wave of IPOs out of some Silicon Valley’s greatest startups comes after a handful of companies have been able to garner huge valuations as they waited for the ideal time to tap the public markets via an IPO. The New York Times pointed to the IPO of Dropbox, the online file storage company, and Spotify, the music streaming service, which happened in 2018 and were both successful IPOs.
The paper noted that tech companies have raised more than $7 billion in 2018 from IPOs. That’s more than 2015 and 2016 combined and more than half the $13 billion raised in 2017, noted the NYT, citing Dealogic, the market data company. Still, the expectations for more IPOs to come to market this year doesn’t compare to the frenzy surrounding Snap’s IPO in March of 2017. The maker of the disappearing messaging app was garnering a lot of investor attention. Once it was public, it struggled and saw its stock trade below the IPO price. Meanwhile, meal kit maker Blue Apron’s stock price declined steeply shortly after it went public.
Among the well-known tech companies that could go public within the next one to two years are Uber, the ride-hailing app, Lyft, its main rival and Airbnb, the home sharing service. These companies have amassed huge valuations by raising venture funding and tapping the private capital markets without the headaches that public companies face. But with public investors looking for fast-growing companies to invest in and with early employees looking to cash out their stakes, some of these companies think now and in the near future is the optimal time to launch an IPO. Another reason: some executives want to prove they can run a public company. “At all levels, there are more and more companies who are thinking about whether to go public this year or next,” said Noah Wintroub, JPMorgan Chase’s vice chairman of investment banking, in the NYT report. “You’ve got an environment now that’s conducive to asking that question, and also a lot of companies that have scaled up to the point where they can go now.”