4 ms·

The floodgates in 2020 have opened with IPOs of alot of these unicorns, Palantir, doordash, airbnb, affirm, jfrog, snowflake, asana. I wonder why the sudden tim

The floodgates in 2020 have opened with IPOs of alot of these unicorns, Palantir, doordash, airbnb, affirm, jfrog, snowflake, asana. I wonder why the sudden timeframe to go public. My guess is they want to ride the wave of stimulus money that has been going on during the spring/summer and the 2nd round which has yet to happen.

xoxoy 6y ago
I mean look at the market - we’re at all time highs. It’s more the trillions the Fed pumped into the markets than stimulus.
- subsubzero 6y ago
  yeah its probably this, market caps on some of these money losers is stratospheric. I think alot of people forgot the lessons of 2000. Take Palantir, a company that is 11 years old and for the past 3 years has lost 600M a year. What monopoly will this company carve out for itself to achieve this lofty valuation? Or lets look at doordash [1] despite the pandemic and most of its workers not being employees(low paid gig workers) it is still losing money at an astounding rate: $533M last year and with a pandemic bump of only a 149M loss this year so far(it expects orders to slow alot after the pandemic). I feel like I am Michael Burry in the big short playing my drums pointing out the obviousness of the huge crash that is coming with alot of these companies. What is scary is alot of americans and foreigners for that matter have their retirement savings(401k) tied up into these mini-titanics. When the fed's tap gets turned off, expect a reckoning. [1] - https://beta.trimread.com/articles/51214 https://beta.trimread.com/articles/51214
  - chasebank 6y ago
    I don't know why you're being downvoted. Your probably is probably right. Most people have amnesia.
  - bertjk 6y ago
    What makes you think the fed's tap will ever get turned off? What preconditions do you think we have to see before it happens? In the past, every time I thought "the Fed will have to tighten soon" something happens which somehow, magically, always requires more easy money to solve. Example: Easy money caused a housing bubble that burst? Now we need easy money to fix unemployment and keep the markets from seizing up. It seems that politicians have now decided that the easy-money solution is always the easiest one, with the least traceable future negative ramifications.
    - subsubzero 6y ago
      It could happen with this Biden presidency, although most likely with whoever comes after him. If you think about easy money and interest rates, with Obama the lowering of interest rates made sense, the country was coming out of a long protracted recession and the money was needed to grease the gears of the economy so to speak. With the Trump presidency he made his north star be the stock market(and keeping it high) and its why he heavily pressured the Fed to keep interest rates extremely low to supercharge the economy(and make him look good). If a vaccine comes quickly and is highly effective long term and covid is eradicated by late spring/summer I expect a big jump in the stock market and a red hot housing market, this would be a time to slowly increase the interest rates, wall street won't like it but at some point it will have to happen.
newguy1234 6y ago
I don't see it as a problem. Innovation is accelerating with new business models and so on. Adoption curve for new technologies could be occurring quicker as well thanks to social media (easier to "spread the word" about new products/services/technologies). I don't see it as a problem because all of these companies have legitimate products/services, legitimate customers and legitimate cash flows. This isn't another dot com situation we are in. There are very few companies going IPO with just an idea. ("we're going to use the proceeds from this offering to build an online pets store called pets.com") It is easy to say "its the stimulus" or "its the fed" but I think there is more going on at a fundamental level.
- john_moscow 6y ago
  From a quick glimpse, the business model of Affirm seems to be about letting people get loans for things they would previously have to save for. In other words: Before: Alice wants to buy a chair that costs $100 from Bob. Alice saves $10 a month and buys a chair. Bob got $100. Alice can buy a new chair every 10 months. She may also conclude after 10 months, that she doesn't want the chair that badly, and would instead save the $100 for retirement, or pay it into the house mortgage, reducing the amortization by a week. Now: Alice wants to buy a chair from Bob. She gets a loan, paying $10 over 12 months. Bob gets $100, Affirm gets $20. Alice can now buy a chair every 12 months. Affirm's founder buys a supercar. Slightly later: Alice's job gets cut due to COVID. She can now only pay $5/month. She gets a $100 stimulus check, but instead of paying off the chair, she buys Affirm stock and remortgages the chair to 24 months. Now Affirm gets $40 in interest and $100 in fed money routed through Alice. Net effect: Alice's purchasing power has reduced 2.4 times, Affirm's founder buys 50 new yachts and starts a company that lets people get loans to buy food.
  - jimjh 6y ago
    Didn't follow the leap to "remortgage". Which service allows remortgaging of consumer goods? Don't forget that Alice gets to sit in the chair 10 months sooner, and study for their GMAT or CISSP.
    - 6y ago
adrr 6y ago
Historic low interest rate shifted a lot of capital to the stock market. Bonds don’t pay anything.
mbesto 6y ago
There is a bigger macro trend here - public investors are clamoring to get in early on the next $ZM, $AMZN, $GOOGL, etc. even if they place bets on 5 of these companies and 1 pans out, it'll far exceed the SP500.
chrischen 6y ago
It's not just stimulus money, but a lot of people save money by not traveling/driving/eating out/going to events.
iloveitaly 6y ago
I have a friend who works for the big four in M&A. He said there's a rush of deals with explicit EOY deadlines because of the tax environment uncertainty. I can't imagine this doesn't play a major role in all of the IPOs happening before EOY as well.
BMorearty 6y ago
In Airbnb’s case their hand was forced. RSUs given to employees in 2014 are going to expire if Airbnb waited til 2021.

xoxoy 6y ago

I mean look at the market - we’re at all time highs. It’s more the trillions the Fed pumped into the markets than stimulus.

subsubzero 6y ago
yeah its probably this, market caps on some of these money losers is stratospheric. I think alot of people forgot the lessons of 2000. Take Palantir, a company that is 11 years old and for the past 3 years has lost 600M a year. What monopoly will this company carve out for itself to achieve this lofty valuation? Or lets look at doordash [1] despite the pandemic and most of its workers not being employees(low paid gig workers) it is still losing money at an astounding rate: $533M last year and with a pandemic bump of only a 149M loss this year so far(it expects orders to slow alot after the pandemic). I feel like I am Michael Burry in the big short playing my drums pointing out the obviousness of the huge crash that is coming with alot of these companies. What is scary is alot of americans and foreigners for that matter have their retirement savings(401k) tied up into these mini-titanics. When the fed's tap gets turned off, expect a reckoning. [1] - https://beta.trimread.com/articles/51214 https://beta.trimread.com/articles/51214
- chasebank 6y ago
  I don't know why you're being downvoted. Your probably is probably right. Most people have amnesia.
- bertjk 6y ago
  What makes you think the fed's tap will ever get turned off? What preconditions do you think we have to see before it happens? In the past, every time I thought "the Fed will have to tighten soon" something happens which somehow, magically, always requires more easy money to solve. Example: Easy money caused a housing bubble that burst? Now we need easy money to fix unemployment and keep the markets from seizing up. It seems that politicians have now decided that the easy-money solution is always the easiest one, with the least traceable future negative ramifications.
  - subsubzero 6y ago
    It could happen with this Biden presidency, although most likely with whoever comes after him. If you think about easy money and interest rates, with Obama the lowering of interest rates made sense, the country was coming out of a long protracted recession and the money was needed to grease the gears of the economy so to speak. With the Trump presidency he made his north star be the stock market(and keeping it high) and its why he heavily pressured the Fed to keep interest rates extremely low to supercharge the economy(and make him look good). If a vaccine comes quickly and is highly effective long term and covid is eradicated by late spring/summer I expect a big jump in the stock market and a red hot housing market, this would be a time to slowly increase the interest rates, wall street won't like it but at some point it will have to happen.

newguy1234 6y ago

I don't see it as a problem. Innovation is accelerating with new business models and so on. Adoption curve for new technologies could be occurring quicker as well thanks to social media (easier to "spread the word" about new products/services/technologies). I don't see it as a problem because all of these companies have legitimate products/services, legitimate customers and legitimate cash flows. This isn't another dot com situation we are in. There are very few companies going IPO with just an idea. ("we're going to use the proceeds from this offering to build an online pets store called pets.com") It is easy to say "its the stimulus" or "its the fed" but I think there is more going on at a fundamental level.

john_moscow 6y ago
From a quick glimpse, the business model of Affirm seems to be about letting people get loans for things they would previously have to save for. In other words: Before: Alice wants to buy a chair that costs $100 from Bob. Alice saves $10 a month and buys a chair. Bob got $100. Alice can buy a new chair every 10 months. She may also conclude after 10 months, that she doesn't want the chair that badly, and would instead save the $100 for retirement, or pay it into the house mortgage, reducing the amortization by a week. Now: Alice wants to buy a chair from Bob. She gets a loan, paying $10 over 12 months. Bob gets $100, Affirm gets $20. Alice can now buy a chair every 12 months. Affirm's founder buys a supercar. Slightly later: Alice's job gets cut due to COVID. She can now only pay $5/month. She gets a $100 stimulus check, but instead of paying off the chair, she buys Affirm stock and remortgages the chair to 24 months. Now Affirm gets $40 in interest and $100 in fed money routed through Alice. Net effect: Alice's purchasing power has reduced 2.4 times, Affirm's founder buys 50 new yachts and starts a company that lets people get loans to buy food.
- jimjh 6y ago
  Didn't follow the leap to "remortgage". Which service allows remortgaging of consumer goods? Don't forget that Alice gets to sit in the chair 10 months sooner, and study for their GMAT or CISSP.
  - 6y ago

adrr 6y ago

Historic low interest rate shifted a lot of capital to the stock market. Bonds don’t pay anything.

mbesto 6y ago

There is a bigger macro trend here - public investors are clamoring to get in early on the next $ZM, $AMZN, $GOOGL, etc. even if they place bets on 5 of these companies and 1 pans out, it'll far exceed the SP500.

chrischen 6y ago

It's not just stimulus money, but a lot of people save money by not traveling/driving/eating out/going to events.

iloveitaly 6y ago

I have a friend who works for the big four in M&A. He said there's a rush of deals with explicit EOY deadlines because of the tax environment uncertainty. I can't imagine this doesn't play a major role in all of the IPOs happening before EOY as well.

BMorearty 6y ago

In Airbnb’s case their hand was forced. RSUs given to employees in 2014 are going to expire if Airbnb waited til 2021.