The IPO Buzz: Great Expectations for 2019

The year 2019 is being billed as a great year for IPOs. It’s expected to be the ride of the unicorns, if you believe the IPO experts quoted in the financial press. A unicorn, of course, is a private company with a valuation of $1 billion or more.

Uber (valuation $72 billion) and Lyft (valuation $11.5 billion) were the first unicorns to ring the 2019 IPO bell in early December when the news broke that they had filed confidential papers with the SEC for initial public offerings. And there was talk of even more unicorn IPOs to come in the future. CBInsights, a website that tracks unicorn companies, says the Global Unicorn Club now consists of 306 unicorn companies with a total cumulative valuation of $1,031 billion. That’s a trillion dollars or what most would call serious money.

But the seasoned IPO players know that in today’s market, the IPO Calendar covers a three-week period.

The IPO Calendar consists of last week, this week and next week.

A Tale of Two Markets in 2018

The IPO traffic depends upon the flow of the underlying U.S. stock market. A good market produces IPOs. In a sloppy market, the IPO traffic dries up. Last year was a clear example of that dichotomy – a tale of two markets – and we’ll have more on that in a moment.

Note: Different IPO services use different measurements for IPOs. uses the information from a company’s prospectus and we omit unit offerings, bank conversations, best efforts offerings, upgrades to larger stock exchanges from smaller exchanges such as moving up to the Nasdaq from the OTC market and foreign companies offering American Depositary Shares. Investors can buy shares traded in foreign stock markets. This makes both the U.S. upgrades and foreign-traded shares secondary offerings.

Now back to the 2018 IPO traffic and its close ties with the U.S. stock market.

A total of 181 IPOs were priced during 2018, according to the U.S. Securities and Exchange Commission filings. Of that IPO Class of 2018, a total of 123 IPOs – or nearly 68 percent – were priced by the end of August. The NASDAQ Composite Index topped out on Aug. 29, closing at 8,109.69, UP 17.5 percent for the year. Then the meltdown started. The NASDAQ sold off to close Dec. 24 at 6,192.92, DOWN 23.6 percent from Aug. 29. Over the last four months, 58 IPOs were priced and only six deals got done during December.

Yes, Virginia, December 2018 was a bad one for the NASDAQ Composite. It lost 9.5 percent for the month, closing Monday, Dec. 31, at 6,635.28, DOWN from 7,330.54 on Nov. 30.

Starting next week, “The IPO Buzz” will resume publishing on its usual Sunday schedule.

Stay tuned.

Disclosure: Neither the author nor anyone else on the staff has a position in any stocks mentioned, nor do we trade or invest in IPOs. The author and staff do not issue advice, recommendations or opinion.