Venture Business Trends: IPO as a “Downgrade”
Venture capitalists are increasingly talking about IPO, as a kind of "downward round" of financing. Indeed, immediately after an IPO, or after some time, the start-up score often falls and is significantly lower than in private rounds. This has happened with companies such as Square , Facebook , Groupon and Zynga .
According to the results of the IPO, the processing company Square received a valuation of $ 2.9 billion. This is more than two times less than the October estimate. The price per share fell below the minimum of $ 11 and amounted to $ 9. The company put up for sale $ 243 million in securities. This is 25% less than the stated amount ($ 324 million). "Megamind" wrote that in October Square was estimated at $ 6 billion.
In December 2011, Zynga mobile games developer began a public offering at a price of $ 10 per share. However, on the very first day the price dropped to $ 9.50. Six months later, she fell to $ 3 per share. Since then, the company's valuation has decreased by 73.16%.
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In 2011, Groupon also launched its IPO website for discounts and coupons. The start was promising - the company's quotes increased by 50% and reached $ 20 per share. But soon after the placement, investors had many questions about the profitability of the company and its prospects. Stocks fell $ 6.32. Then the fall continued and reached 89.7% in August 2015. But before the IPO, Google offered to buy Groupon for $ 6 billion.
At some stage, these companies were overvalued, and after an IPO they were simply returned from "heaven to earth." In connection with what is happening, many analysts do not miss the opportunity to recall the pretty dirty teeth of the dotcom bubble. That is, now, if a company acquires a reputation of not just a “bubble”, but a bubble that is about to burst, public investors, and then private investors, “turn away” from it.
A number of experts associate the phenomenon of the “downward round” with the unstable economic situation in the world, with the volatility of the stock markets, with the dollar, and someone calls such failures temporary “anomalies”.
However, some experts believe that the gap between the estimates before and after the IPO is not so fatal in the long term, reports TechCrunch. Facebook in its time also passed the "test of publicity." Then, in May 2012, the company made a number of miscalculations when placing, and the price per share fell well below the expected. After that, Facebook restored its reputation for a year. However, now, three years later, the company's valuation has increased more than five times.
According to the results of the IPO, the processing company Square received a valuation of $ 2.9 billion. This is more than two times less than the October estimate. The price per share fell below the minimum of $ 11 and amounted to $ 9. The company put up for sale $ 243 million in securities. This is 25% less than the stated amount ($ 324 million). "Megamind" wrote that in October Square was estimated at $ 6 billion.
In December 2011, Zynga mobile games developer began a public offering at a price of $ 10 per share. However, on the very first day the price dropped to $ 9.50. Six months later, she fell to $ 3 per share. Since then, the company's valuation has decreased by 73.16%.
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In 2011, Groupon also launched its IPO website for discounts and coupons. The start was promising - the company's quotes increased by 50% and reached $ 20 per share. But soon after the placement, investors had many questions about the profitability of the company and its prospects. Stocks fell $ 6.32. Then the fall continued and reached 89.7% in August 2015. But before the IPO, Google offered to buy Groupon for $ 6 billion.
At some stage, these companies were overvalued, and after an IPO they were simply returned from "heaven to earth." In connection with what is happening, many analysts do not miss the opportunity to recall the pretty dirty teeth of the dotcom bubble. That is, now, if a company acquires a reputation of not just a “bubble”, but a bubble that is about to burst, public investors, and then private investors, “turn away” from it.
A number of experts associate the phenomenon of the “downward round” with the unstable economic situation in the world, with the volatility of the stock markets, with the dollar, and someone calls such failures temporary “anomalies”.
However, some experts believe that the gap between the estimates before and after the IPO is not so fatal in the long term, reports TechCrunch. Facebook in its time also passed the "test of publicity." Then, in May 2012, the company made a number of miscalculations when placing, and the price per share fell well below the expected. After that, Facebook restored its reputation for a year. However, now, three years later, the company's valuation has increased more than five times.
Source: https://habr.com/ru/post/296632/
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