2020 is turning out to be a strong IPO year

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Updated on Mar 11, 2020

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A surprising statistic show 2019 was one of the best IPO years despite being dominated by failed IPOs and disappointing listings such as Uber, Lyft, and Peloton.
The Renaissance IPO Index rose 35% last year, beating the S&P 500’s impressive 30% gain.
Renaissance Capital end year report stated that in 2019, 160 companies went public and raised a total of $46.3 billion, almost a similar amount raised in 2018, only with 32 fewer listings.

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If you thought last year’s IPO market was one of the slowest, you might
want to reconsider that after a recent surprising statistic that suggested IPOs beat the market last year.

You heard it
right, 2019 was among the best IPO years despite being dominated by failed IPOs and disappointing listings such
as Uber and Peloton.

The Renaissance
IPO Index rose 35% last year, elbowing the S&P 500’s impressive 30% gain.

JP Morgan’s chairman of
market and investment strategy Michael Cembalest published a 2020 Outlook stating companies such as Medallia
and Zoom which jumped 40% and 80% respectively since going public are “pure
tech” plays. The report noted that these tech firms managed to scale with
minimal added costs compared with other similar firms that had more hardware to
fund.

Several analysts
that spoke to Fortune expressed confidence about the 2020 IPO market, with
many saying it would comprise more deals but a highly-cautious crop of
investors keen on investing in firms they believe are capable of thriving in
the public markets.

“Getting these
highly unprofitable companies off the road map creates spaces for
fast-growing—though maybe not hypergrowth companies—to go on the road map,” Adeo
Ressi, CEO of pre-seed startup accelerator The Founder Institute, said.

One investor whose placement in Bill.com’s December IPO turned out to be a disappointment said: “I think it is going to be less volatile than 2019 because, in 2020, investment bankers are going to be more careful about pricing. In 2019, there were a handful of mispriced IPOs—so in 2020, there will be fewer mispriced deals.”

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Renaissance
Capital end year report stated that in 2019, 160 companies went public and
raised a total of $46.3 billion, almost a similar amount raised in 2018, only
with 32 fewer listings.

But it doesn’t mean
this year will be less frosty.

Already, we’re
seeing companies such as Casper, which record negative returns, gearing up for
the public market. The self-proclaimed pioneer of the “sleep economy” will be
among the first IPOs of the decade if its recent filing is anything to go by.

Airbnb is also
said to be putting its house in order ready for a listing later in the year. Others
firms that have expressed interest in going public in 2020 include GitLab,
Asana, and troubled shared workspace provider, WeWork.