In 2019, we saw several big companies go public. From Uber to Pinterest, Peloton to Beyond Meat — the lineup was so big, 2019 was dubbed the year of the unicorn.
Off the back of that, 2020 looked to be another blockbuster year. Back in January, companies such as Airbnb, Doordash, Asana, Instacart, and Casper were on deck to go public. Casper eventually floated in early February, but the others...
Well, the coronavirus pandemic has swept across the world and here we are.
For a company like Airbnb, which relies heavily on the travel industry, it feels safe to say the disruption has been a downer, starting with holidays grinding to a halt.
In early April, Airbnb announced it was raising US$1 billion through a combination of debt and equity. The additional capital was set to help support Airbnb’s “ongoing work to invest over the long term in its community of hosts,” but one could assume the subtext is it would help support the company as an IPO in 2020 looks less and less likely.
This week, Airbnb revealed it was laying off 25% of its workforce — approximately 1,900 of its 7,500 staff — and cutting its investments in hotels and movie production. Further, Airbnb CEO Brian Chesky said he expects revenue to drop by more than half.
Instead of going public, Airbnb might be wondering whether it will survive at all, and will be relying heavily on the idea of a post-pandemic travel boom (that still may be years away).
On the other hand, companies such as Doordash and Instacart — both food delivery companies operating in the United States — seem to have benefited from the crisis.
Doordash, already America’s top meal deliverer, extended its lead during lockdown, although it’s worth noting the company does not yet make a profit.
Meanwhile, Instacart has hired hundreds of thousands more contractors to help it fulfil the flood of new orders. According to Forbes, the surge in demand has made the company profitable for the first time ever — something that will likely help when it does eventually go public.
While the New York Stock Exchange’s vice chairman, John Tuttle, has said IPOs can continue through the crisis, in that they can execute IPOs in a purely electronic and remote manner, he also noted the listing market has ground to a halt (in the US).
However, a few of the companies less impacted by the macro environment — healthcare and biotech companies, in particular — are still moving forward with IPO plans.
After such a mammoth year of IPOs in 2019, it will be interesting to see what 2020 ends up delivering, what gets put on hold, and what never turns around.
Important! We’re sharing with you our thoughts on these companies for your informational purposes only. However, we are not making recommendations to buy or sell holdings in a specific company. Past performance isn’t a reliable indicator of future performance.