Unicorn hopefuls hurt by IPO collapse

WeWork, Peloton, Endeavor, Poshmark and more just got the message: It’s not a great time to go public.

Disappointing initial public offerings and unsettled economic conditions could shut down many IPOs for the rest of the year — and maybe well into 2020, when the next batch of marquee IPO candidates like Airbnb could meet an even gloomier market and geopolitical environment.

The Hollywood agency Endeavor Group Holdings Inc shelved its IPO on Thursday, saying unfavourable market conditions have dented investor sentiment. Poshmark Inc, the food-delivery company, is expected to postpone its IPO into next year. Also in flux are a range of stock offerings from ecommerce companies and cybersecurity firms Palantir Technologies Inc, Postmates Inc, and McAfee Inc.

The dim outlook isn’t a total surprise given the high-profile flops this year. Fitness start-up Peloton Interactive Inc fell 11 per cent below its IPO price on its first day of trading Thursday and fell further on Friday. WeWork, the office-sharing company, was forced to put off its offering to next year in the face of tepid demand.

Disconnect

The trend shows a disconnect between companies’ lofty private valuations and public expectations that are sceptical of even wellknown brands. “Private valuations have been going up, but that hasn’t necessarily translated into the public IPO market,” said EquityZen research analyst Adam Augusiak-Boro.

Sharing-economy startups, especially late-stage companies, are going to have a tough time going public, said Bloomberg Intelligence analyst Mandeep Singh. The appeal of selling rather than going public will increase for companies such as Postmates, he said.

“Companies aren’t necessarily rushing to go public,” said Alan Felder, head of private capital markets for Americas at UBS Group AG. “The private market is very healthy.”