The major market exchanges have been buoyant through most of 2019, and that usually translates into success for Wall Street debutantes. Sure enough, most IPOs have gained ground this year -- including a few that have more than doubled.
Winners outweigh the losers among the rookie class of 2019, but that still finds 31% of this year's new offerings trading below their IPO prices. Lyft (NASDAQ: LYFT), SciPlay (NASDAQ: SGMS), and Uber Technologies (NYSE: UBER) are some of this year's new stocks that are now broken IPOs. Let's crack open the hood to see why all three engines aren't running the way they should.
Image source: Lyft.
Lyft: Down 29%
The country's second-largest ridesharing service has been a bumpy ride for investors, sliding in five of its first six full weeks as a public company. Lyft is putting on a great show when it comes to revenue growth. Its top line more than doubled in 2018, and lived up to the hype by soaring 95% in its first quarterly report as a public company last week.
The problem with Lyft is that steep losses are mounting. It also doesn't help that Lyft hit the market at a valuation of $23 billion, a price tag that public investors feel is too dear for Uber's feisty but distant rival. The market has lost its appetite for both stocks, but Lyft is worth keeping an eye on as the hungry competitor that is nibbling away at Uber's dominant market share.
SciPlay: Down 6%
Spinoffs tend to be popular with investors, especially when a company carves out a faster-growing segment so it can trade on its own. Gaming and lotto tech specialist Scientific Games took SciPlay public earlier this month, hoping that its casual gaming app business would become a hot IPO. The new offering disappointed through its first six days of trading.
Growth is slowing for SciPlay. Revenue rose 15% last year, less than half of its 31% top-line gain in 2017. SciPlay is still growing a lot faster than Scientific Games, which has posted single-digit percentage growth for three consecutive years.
SciPlay reaches a wide audience with its social casino apps, serving 2.6 million daily active users and 8.3 million monthly active users. SciPlay is also the one company on this list that's profitable. There are naturally regulatory and other risks inherent with smartphone gambling apps, but SciPlay has a good chance of bouncing back once investors warm up to its profitable growth.
Uber: Down 8%
Lyft's rough start since hitting the market in late March was a bad omen for Uber, and we saw that play out with Friday's IPO. The company that was once looking to go public valued at as much as $120 million had to settle for a fully diluted market cap closer to $82 billion, and that still was too much for last week's first wave of public investors.
Uber commands nearly two-thirds of the country's ridesharing market, but it also excels in many international markets as well with its Uber Eats restaurant-delivery platform. Uber and Lyft are losing a lot of money. Uber has generated an operating loss of nearly $10 billion over the past three years combined.
A rough first day isn't the end for Uber. Ridesharing remains a growing trend, and it's effectively a two-company market at this point. Lyft and especially Uber will benefit from the scalability here, and even with growth slowing at Uber, it could be scratching the surface as to what it does with its growing base of riders and drivers.
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