The big question of tech IPOs: what happens after the pandemic?


Hello, this is Tae from the Bloomberg Opinion team. The market for technology initial public offerings is booming again. This month is on track to set an all-time high for money raised in U.S. IPOs, capping an already record-breaking year, according to Bloomberg data.

The next few days are shaping up to be a blitz: food delivery leader DoorDash Inc. and online home rental giant Airbnb Inc. recently increased their IPO price ranges ahead of impending listings. . DoorDash valued its bid at $ 102 per share on Tuesday, putting the company on track to become the third-largest U.S. bid this year. DoorDash is expected to start trading on Wednesday, followed by Airbnb on Thursday.

Investors can also look forward to the public market debut of virtual gaming platform Roblox Corp., online lending company Affirm Holdings Inc. and ContextLogic Inc., the parent company of the app. Wish e-commerce, all billions of dollars.

One obvious reason for the current rush is that recent tech IPOs have gone well. Snowflake investors, including Warren Buffett’s Berkshire Hathaway Inc., have seen their shares more than triple in value since the company was listed in September. And it’s not just Snowflake. The Renaissance IPO Index, which tracks new public companies, has more than doubled this year.

It is not an aberration. Historically, the scarcity of growth in difficult economic environments has benefited growth-oriented tech stocks. And many tech companies have seen an additional boost during the pandemic, which has led to an acceleration in long-simmering tech trends, from cloud software to food delivery to video games.

But for every tech unicorn now riding the wave from work from home to public markets, there is a question: What happens after the pandemic?

DoorDash, Roblox, and Airbnb all seem to have good answers. DoorDash has taken a leap forward to become the # 1 food delivery player in the United States and is expanding into the local commerce market flirting with profitability. Roblox’s astonishing success in the category of games for young children bodes well for its ambitions to be the platform for virtual worlds, even after schools reopen. And finally, Airbnb has shown agile resilience under extreme circumstances, indicating that it still has what it takes to be a leader in the travel industry once restrictions are lifted.

Meanwhile, Wish and Affirm flyers don’t have as many signs that they will continue to rise after the coronavirus. For Wish, which allows Chinese merchants to sell their products inexpensively around the world, sales growth fell from 67% to 33% in its last quarter compared to the previous year, even when it stalled. . And Affirm, which provides installment loans to online shoppers, revealed that nearly 30% of its revenue comes from a single client: Peloton Interactive Inc.

So, yes, the current IPO boom is expected to last for a while. And many people will never return to their less technological existences before the global lockdowns. But the savvy investor should always sift through the latest offers. As hard as it is to imagine, the pandemic will not last forever.



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