The IPO season in the first half of 2019 was one of the busiest in history. We recently took a look back at the biggest IPOs in the first six months of this year; today we’re focusing on big IPOs that could come through in the second half of the year.
While it's impossible to carry out the due diligence on an IPO without the S-1 filing, we’ll seek to get an initial sense of the IPO market ahead, and start to focus on the analysis of every company. As the S-1 filings become available, we’ll also cover each one individually.
The We Company (WeWork)
Latest Valuation: $47 billion (2019)
WeWork started out with a simple concept of shared working spaces, renting out office space and offering flexibility and built-in amenities. If a business needs an office for a few people and/or a short period, WeWork allows it to stay flexible on the length of time and space it needs, while providing office supplies to employees.
The biggest question revolves around WeWork’s business model. The company is reported to have lost $1.9 billion on revenue of $1.8 billion in 2018. WeWork claims that the losses are part of investment in future growth, and while that may be true, $47 billion seems like a lofty valuation for a real-estate company deep in red ink.
WeWork submitted its S-1 filing to the SEC in December 2018, but there is no immediate timeline for its IPO. Investors will have to wait until a few weeks before the actual IPO before gaining access to its financial history.
Airbnb
Latest Valuation: $38 billion (2019)
Another star of the so-called sharing ‘economy’, Airbnb has been the object of IPO rumors for at least a year now. However, the wait may soon be over. With the stock market at an all-time high, this would be an ideal time for Airbnb to offer its shares to the public.
Airbnb allows private individuals to earn extra income by hosting guests in their homes. It's grown hugely popular in recent years, and hosts are reportedly putting up 2 million people a night. Financially, Airbnb seems to be in fine shape, having reported over $1 billion in revenue in the third quarter. Additionally, Airbnb is said to have had a positive EBITDA over the past two years, cementing its position as a sustainable and profitable business.
It hasn’t filed its S-1 yet, but once it does, the company could go public in a matter of months.
Palantir
Latest Valuation: $25 billion (2015)
Palantir is a rather secretive data mining and analysis company, working for governments as well as private clients. It analyzes vast amounts of data and finds actionable information in what would otherwise be considered noise. It is rumored to have helped the U.S. government catch Osama Bin Laden in 2011. Palantir was established in 2005, so an IPO is overdue.
The company is reported to have generated nearly $1 billion in revenue last year, and to have narrowed its losses to around $30 million. Its revenue growth is said to be around 40%, which is an impressive number for a well-established company. More recent estimations have put Palantir’s valuation as high as $41 billion in 2019.
A 2019 IPO isn’t guaranteed for Palantir. The company probably needs to overhaul its finance department and hire an experienced CFO before even filing its S-1. Nevertheless, some early investors are clamoring for liquidity and the current IPO window may be too good to pass up.
Peloton
Latest Valuation: $4.1 billion (2018)
Fitness equipment maker Peloton is preparing for a 2019 IPO. In early June, the company announced it had confidentially filed its S-1 with the SEC. Peloton sells stationary bikes and treadmills with large touch screens, allowing users to connect to classes. The bikes cost almost $2,000 and buyers must also pay nearly $500 annual membership fee for access to classes. It has reportedly sold 400,000 bikes so far, and its revenues for the past fiscal year are said to be above $700 million, almost twice the $370 million in revenue it brought in last year.
Peloton sells more than bikes. It also sells community and status. However, over the long term, the question remains whether the company can scale up to the millions. Is it anything more than a glorified fitness company? We’ll get the answers once we get the S-1 filing, but our initial assessment is that Peloton is the type of company Wall Street will love irrationally.