COTW: % of IPOs With Negative Earnings

April 9, 2018

The chart below can be downloaded here.

 

More than 75% of the companies that made initial public offerings in 2017 were losing money at the time of their listing – the highest percentage since the peak of the Dot-Com bubble in 2000. Looking at this year, IPO activity jumped in Q1 with 43 companies collectively raising almost $16 billion. This represented a nearly 50% increase relative to Q4.  2018 has also seen a number of billion-dollar-plus IPOs, including the April direct listing of Spotify (which also loses money).

 

We believe this trend of looking to public markets to fund the operations of businesses that do not generate any earnings while oftentimes providing exit liquidity to early private market investors speaks to the general risk-seeking environment of today. We also wonder how sustainable this trend is, especially if rates continue to rise.

 

 

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SpringTide Partners, LLC is a Registered Investment Advisor with the state of Illinois and other states jurisdictions where required. Registration with the SEC or any state securities authority does not imply a certain level of skill or training. All information contained herein is for informational purposes only and does not constitute a solicitation or offer to sell securities or investment advisory services. All investing carries risk including risk of principal loss. All statements made on this website are opinions of SpringTide Partners, LLC and are subject to change. SpringTide Partners, LLC assumes no responsibility towards the accuracy of the data included. Statements made on website shall not constitute investment advice.

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