A more receptive market in 2020? One Medical’s IPO raises hopes for IPO hopefuls

After WeWork’s failed listing, everyone seems to be talking about
revenues. But is there a possibility of sailing through without having impressive
numbers? This is a question investors were bickering with before One Medical went public last week.

But less than a week in the public market, shareholders of One Medical
are already counting billions in gains after the firm’s shares (ONEM) closed the week at $22.07, denoting a
47.13% gain.

The Nasdaq-listed medical provider started trading at $18 and
later rose to a high of $22.95, before closing off having dipped $0.88.

At the current price, the firm is trading at more than 40% above
its IPO price, marking one of the strongest debuts in recent times.

The result is a boon for the medical company, having raised about $532.1 million in a past private funding. At $14, One Medical was worth about $1.71 billion, but at the current market price, the company’s market share stands at close to $2.7 billion, about 58% higher than the initial valuation.

 The Carlyle Group, J.P.
Morgan, Redmile Group, GV and Benchmark are among the company’s top investors
and to them, the debut is a total success, placing their holding more than 50%
higher in less than a week.

The warm reception of One Medical came as a relief to other unicorns
that are looking to go public, considering a rough past year that saw companies
including Uber and Peloton, register worrying performance since going public.

Is the market finally changing and ready to embrace newly-listed
companies? May be investor appetite is higher in the new decade?

Well, whatever the cause, the positive reception will be opening up
the market to more listings, thanks to One Medical’s IPO signal. The unicorn’s
gross margins are below 50%, with meagre recurring revenue and a 30%-revenue
growth in the past year. At its best, the firm is today worth more than 13x its
revenue for the first three quarters of 2019.

We’ll be following up on One Medical’s listing to try to
understand the dynamics of this decade’s IPO market. Stay tuned for more.