Question

The recent surge in IPO's is very interesting to analyze. The reason so many big name companies have recently decided to go public is due to the fact that there is high demand. However, not all of these companies have had great success since going public. For example, Uber and Lyft both went public at the beginning of 2019. By the end of 2019, both of these well known and used ride sharing companies were trading below their IPO price. An interesting thing to consider is the fact that these two competitors both went public within 30 days of each other. This is something that has never happened before between two large competitors. Another interesting company to look at is Snapchat. Snapchat went public in early 2017 and shortly found themselves running into similar problems as Uber and Lyft. By September 2018, Snapchat had experienced large losses, slowing growth, and their stock had dropped to 50% below its IPO price. There are many things to consider when thinking about what it takes to have a successful IPO. To determine if an IPO is successful you must look at the capital raised, share price appreciation, valuation, new customers and talent, and supplier confidence. In order for these categories to improve after the IPO, there are many things companies can do. First, to have a successful IPO, a company must have a large and growing market. It also helps to have a unique business model. Second, a company that wants to have success going public must have an attractive product or service as well as an established track record. Lastly, the company needs to have strong margins and cash flow generation.

I need response to this question, but isn't written by a hand for a better understanding .

This is answer to this question Recently there has been a surge of IPOs – Snapchat, Carbon Black, Lyft, Huya, Uber (pending), etc. Were they successful and why? What does it take to have a successful IPO? I need response or comment to the answer

Answer 1

Yes, it is rightly said that there has been a surge of IPOs - Snapchat, Carbon Black, Lyft, Uber etc. as per the information given. Many big companies have decided to go public just because of high demand and Snapchat started this trend in early 2017 by going public. In Sep.2018, it experienced large losses and slow growth due to which it's stock value dropped to 50% below its IPO Price. Again Uebr and Lyft both went public in begining of 2019 and obserevd same situation by the end of 2019 that both were trading below their IPO Price. So,we can say that they were not successful and their decision to go public led to losses as their stock price dropped below IPO Price.

The reason behind their failure or not getting successful is that they ignored some points which needs to be taken care of that time like considering share price appreciation, valuation, new prospect or customers and talent, capital to be raised and supplier confidence.

To have a successful IPO, company should consider following points:

• Comapny must have a large and growing market so that it will help in developing a unique business model.
• A company must have an attractive product or service as well as an established track record to attract and win public's interest and faith.
• A company should have strong margins and cash flow generation.