DoorDash and Airbnb Lead Unicorn IPO Parade

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DoorDash revealed in its latest filing with the Securities and Exchange Commission on Monday that it is looking to value its IPO between $ 75 and $ 85 per share and that it expects to have around 317.7 million shares outstanding. .
At the high end of that range, DoorDash is estimated to be valued at $ 27 billion – up from $ 16 billion the last time the delivery service raised funds in private markets, according to CB Insights.

Airbnb will also be closely watched for signs of a recovery in the hotel sector after the Covid-19 pandemic crushed travel demand. The company was valued at $ 18 billion earlier this year – still massive, but a steep decline from the $ 31 billion it commanded before the coronavirus.

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Nonetheless, IPOs (and tech IPOs in particular) are making a big comeback. Software companies Snowflake, JFrog, Sumo Logic, and Unity have already had a stellar debut this year.

“It’s amazing how quickly the traditional IPO market has returned,” said Frank Lopez, co-director of global securities and capital markets practice at law firm Paul Hastings. “It’s actually a cheaper deal now than what we’ve seen in a long time.”

The injured unicorns came back to life

The rebirth of the IPO market is a stunning turnaround from just over a year ago. Uber and rival Elevator (ELEVATOR) went public with great fanfare in 2019, but their shares collapsed shortly after their IPO.

And buzzing startup WeWork has ended its Wall Street debut due to scrutiny of its giant losses, wacky corporate culture, the ouster of CEO Adam Neumann and a bailout by investor SoftBank.

“Last year we had the Wework debacle and the hangover from Uber and Lyft. But stock investors are screaming with excitement again,” said James Gellert, CEO of research firm RapidRatings.

Gellert said DoorDash, which has seen strong revenue growth, appears to be more attractive than Airbnb, but both companies are still losing money.

This may not deter investors, however. Uber, after all, is still not profitable, but the stock recovered from its pandemic low earlier this year and is now up 66% in 2020, largely thanks to a rebound in its core business. of carpooling and the growth of its Uber Eats division. .

And DoorDash and Airbnb aren’t the only unicorns expected to test the public markets before the end of the year.

2021 is shaping up to be a big year for IPOs, PSPCs and direct listings

The Wish online shopping app has filed for an IPO. The company is worth $ 11.2 billion, according to CB Insights. And the video game platform Roblox, with a valuation of $ 4 billion, is also looking to go public.

Next year could be even more active. Instacart, payment processor Stripe, and popular stock trading app Robinhood are all reportedly considering a 2021 offer.

These companies could be the headliners of another category of IPO. Josh Kushner’s Coinbase, Nextdoor, Bumble, and Oscar Health are also IPO contenders.

“Investors in IPOs think six to twelve months ahead. They are optimistic,” said Wouter Witvoet, CEO and founder of Secfi, a company that helps startup employees fund the exercise of options. on shares. Witvoet said his company is working with Airbnb and DoorDash employees.

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Overall, a traditional IPO still seems to be the preferred method for the best unicorns to go public. But not all companies hire Wall Street bankers to sell stocks to large mutual funds, hedge funds, and other institutional investors.

Some companies may choose to come to Wall Street via blank check mergers with special purpose acquisition companies or PSPCs. The success of Galactic Virgo (SPCE) and DraftKings helped validate PSPCs as a way to reach markets.
“There are so many more options for companies to go public,” Witvoet said. He noted that Secfi was working with Hims and Hers, the telehealth company best known for its sexual wellness products. Hims and Hers plans to go public with a SPAC called Oaktree Acquisition Corp (OAC).
Other companies that don’t need to raise a lot of new capital can also list their shares directly on a stock exchange – a method used by big data firm Palantir, Spotify (SQUARE) and Soft (JOB) – which, according to rumors, would be a target of repurchase for Salesforce (CRM).

“Overall, there should be a significant increase in the number of publicly traded companies,” said Lopez, counsel for Paul Hastings.

Lopez added that the problems at WeWork and the growing pains for Uber, which replaced founder Travis Kalanick with Dara Khosrowshahi, the former CEO of Expedia (EXPE), have been a good thing for other IPOs as they have forced companies to stop acting irresponsibly.

“What is different today compared to the past two years?” Lopez said. “The companies had waited longer to go public because they continued to get higher valuations from venture capitalists. But after WeWork and Uber, there is now better corporate governance.

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