Companies that changed Wall Street in the 2010s.
Many tech companies went public during the past decade, including a number of so-called unicorns, pleasing investors, both venture capitalists and retail investors. While the stock market and investment bankers were fascinated by these private companies who grew immensely in size, revenue and branding, the strategy of allowing private companies to "grow so large before their initial public offering where the owners had siphoned off much of the early growth," leaving less for public shareholders, says Steve Sosnick, chief strategist of Interactive Brokers, a brokerage in Greenwich, Connecticut. Here are 10 companies that opened to the public in the 2010s.
Twitter: (ticker: TWTR)
The social networking company Twitter attracted many users since it went public in 2013. The price of the stock has often been volatile and at times dipped under its IPO price of $26 a share. While the company has risen in notoriety, especially as politicians, athletes and actors have embraced the social media giant to voice their opinions and increased traffic and the number of monthly users, the stock has failed to appreciate. "Twitter has struggled with how to monetize what the market deemed was a great idea," says Peter Roselle, a Treasure Coast, Florida-based trader. "It could be a good speculative (buy) long after being beat down this past earnings season."
Return since IPO: -27%
Snapchat parent Snap faced extreme volatility since the company's IPO in 2017. Shares of the company dropped as low as $4.92. The company upgraded its offerings, which has increased growth among new users and engagement from current users. Snapchat is a messaging platform that allows users to send pictures and videos to other users, but the content is only available for a short period. The initial market valuation of of $23.8 billion from Snapchat's IPO did not last long, as the stock dove the next day. In the past 52 weeks, the stock ranged from a low of $4.82 to a high of $18.36.
Return since IPO: -46%
A social networking company, Pinterest attracts people who have various hobbies and interests. Even major companies have embraced Pinterest and its use of photos, charts and other images, as a way to engage in current and future customers. The company went public in April 2019 and its share prices have been volatile. One positive sign is that the number of monthly active users, a metric used by social media companies, has risen to 300 million in the second quarter, an increase of 30% from the same period a year ago.
Return since IPO: -22.4%
Uber Technologies (UBER)
Ridesharing company Uber had its IPO in May 2019 under massive scrutiny from institutional and retail investors. But unfortunately for investors, the IPO was disappointing and the stock has yet to recover. Shares of the company were priced at $45 that day, but have been trading below that price, reaching a low of $28.03. A change in IPO sentiment occurred over the past year, Sosnick says. "Markets were fascinated by 'unicorns,'" he says. "Investors wised up to companies like Uber and Lyft (LYFT) who have no obvious path to profitability and were touted as tech companies despite having prosaic basic businesses."
Return since IPO: -30.6%
HCA Healthcare (HCA)
HCA Healthcare, a hospital and health care facility owner, conducted its IPO in 2011 in what was the largest private-equity backed offering at the time, raising $3.79 billion. The company went public at $30 a share and is currently trading nearly $140. HCA was acquired during a leveraged buyout in 2006 for $21 billion, not including its debt, by Bain, Bank of America, Citigroup, KKR and HCA's founder, Thomas Frist Jr. HCA has shown consistent profits and has "performed accordingly well," Sosnick says. "Regardless of the initial hype surrounding their IPOs, markets have ultimately done a reasonable job rewarding the companies that have demonstrated sustainable growth and a path to sustainable profits and left behind the others."
Return since IPO: 346%
Facebook's IPO in 2012 was highly sought because the social media behemoth's deal size was estimated to be $16 billion with a price of $38 per share. While the first year of Facebook going public was rough for traders since shares plunged by 40%, the stock has more than recovered. Facebook's growth and profit margins have been consistent. The company's stock has faced some hurdles this year, ranging from a low of $123.02 to $208.66. During the third quarter, Facebook reported 2.45 billion monthly users, an increase from 2.41 billion in the second quarter.
Return since IPO: 422.6%
Alibaba Group Holding (BABA)
Alibaba, the Chinese-based e-commerce company, had its IPO in 2014 on the New York Stock Exchange and raised $25 billion. In November 2019 it began listing shares on the Hong Kong Stock Exchange and raised another $11.2 billion, making it the largest IPO in 2019. Alibaba has been a successful because it allows smaller retailers to open an online store and sell its products, similar to eBay (EBAY).
Return since 2014 IPO: 107.3%
Beyond Meat (BYND)
Beyond Meat capitalized on interest in plant-based burgers in 2019 by launching one of the most successful IPOs of 2019. Priced at $25 per share, BYND stock soared by more than 200% in the weeks following the IPO and two global fast food companies made major announcements about their own meatless burger products. Although the stock since pulled back, interest in healthy eating options continues to grow and Beyond Meat occupies an interesting space also populated by privately held Impossible Foods, as well as Tyson Foods (TSN), Kellogg Co. (K), Kroger Co. (KR) and Conagra Brands (CAG).
Return since IPO: 18.3%
Tesla, an electric vehicle manufacturer, went public in 2010 at $17 a share. While the company has never turned an annual profit, shares rose exponentially. TSLA stock has been extremely volatile during the past 52 weeks, plunging by more than 50% to $176.99 from a high of $379.49. Although Tesla achieved record sales, profits have been elusive. "Whether burning shorts or burning cars, Tesla has survived orders of magnitude longer than its critics would have predicted," Roselle says. "The question remains on what will happen first -- the market losing patience, headwinds like legal issues and low margins abating. Only time will tell and both sides of the trade have been burnt more times than one can count."
Return since IPO: 1,638%
Spotify Technology (SPOT)
Spotify, the music streaming service, went public in 2018 in a "direct listing" and opened at $165.90 a share. Shares of the company have traded lower since the offering. The shares have ranged from $103.29 to $161.38. The company beat analyst estimates for the third quarter by earning 40 cents a share based on revenue of $1.93 billion. Spotify, a Stockholm-based company, added 5 million new subscribers in the quarter for a total of 113 million premium subscribers, beating its own estimates by 1 million new paid subscribers. Management said that investing in podcasting was the right move since the hours streamed rose by 39% from last quarter as well converting more free users to paid ones.
Return since IPO: -3.9%
The most notable IPOs of the decade:
-- Twitter: (TWTR)
-- Snap (SNAP)
-- Pinterest (PINS)
-- Uber Technologies (UBER)
-- HCA Healthcare (HCA)
-- Facebook (FB)
-- Alibaba Group Holding (BABA)
-- Beyond Meat (BYND)
-- Tesla (TSLA)
-- Spotify Technology (SPOT)
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