Analysis of the Recent IPO Craze Using PythonLet’s discuss the heroes and the zeros.
Performing analysis of the recent wave of Initial Public Offerings.
Luke PoseyBlockedUnblockFollowFollowingMay 13IPOs are all the buzz in trading circles these days.
Here’s a simple evaluation of some of the more popular IPOs from 2019.
MethodWe’ll take a standard approach for analysis of all the following IPOs.
We’ll first visualize analysis of relevant factors like revenue and net gains/losses.
We will not levy any opinions on quality of companies or opinions on future profitability.
We will simply provide and visualize relevant data.
We will also visualize the stocks’ performances since IPO and provide basic information for each company.
We use the Python interface for IEX.
If you have read my other articles, you’ll known IEX is my go-to API for financial data.
Trading around IPOs can always be wild and performance is anyone’s guess.
The businesses that investors view as sound businesses with little risk for increasing profits will perform well.
Businesses deep in the red with lots of competition will struggle if they price their stock too aggressively.
Let’s have a look.
AnalysisRevenueThis tracks the revenue by company in 2018, measured in 10s of billions.
2018 Revenue by CompanyNet Gain/LossThis chart tracks each company’s gain/loss for 2018, measured in millions.
Net Gain/Loss by CompanyFirst 3 Days PerformanceThis chart tracks the stock’s performance over the first few days since IPO.
3 Day Stock Performance by CompanyLyftAs most probably know, Lyft is a ride-sharing app that supports cars, scooters, and bikes.
Lyft’s IPO took place on March 29th.
Lyft priced its IPO at $72 per share, right at the top of the range.
About a month later, the stock is now priced around $50.
Because of this sharp decline, many viewed the IPO as a failure.
Lyft Price DataAs you can see, this IPO has been shooting down from the start.
Where the price settles is anyone’s guess.
Lyft Financials DumpLyft Income StatementWe dump the financials very simply.
Most relevant to the Lyft IPO is the continued losses, continuing to run in the green.
Last year, Lyft lost about $911 million on $2.
2 billion in revenue.
TradewebTradeweb operates OTC markets for fixed income and derivatives.
They serve banks, funds, insurance companies, and other high value clients.
The company was founded in the late 90’s and evolved into a formidable business with revenues over $186 million and net income of $42.
4 million as of Q2 2019.
Tradeweb Price DataTradeweb Financials DumpTradeweb Income StatementWith Tradeweb we are viewing a far more reasonable financial situation.
Tradeweb is a fin-tech company hopeful to leverage latest technologies to provide greater efficiency and transparency for clients.
PinterestPinterest is a social media company known for its ability to browse images and videos.
Pinterest is in the early days of its monetization efforts but currently draws the majority of its revenue from “promoted pins.
” This is just a space for paid advertisement, and the majority of users paying for these pins are fashion and beauty companies.
Pinterest Price DataPinterest Financials DataPinterest Income StatementWhen Pinterest shared their earnings, we learned Pinterest had a fourth-quarter profit last year of about $47 million, with full-year losses at about $63 million.
The hope by investors is that Pinterest can further monetize the platform and continue to grow users.
Their revenue growth continues to be very large, at about 60% each quarter.
It will be interesting to see how Pinterest monetizes further.
Maybe promoted pins will be a sufficient source of revenue?Beyond MeatBeyond Meat is a producer of plant-based meat substitutes.
They produced the first plant-based burger to be sold in the meat section of grocery stores, going international.
They had a massively successful IPO with the stock jumping from 45 to 70 in the first day of trading.
Continued gains have been fueled by rumors of partnerships with large restaurants.
Beyond Meat Price DataBeyond Meat Financials DumpBeyond Meat Income StatementBeyond Meat did revenue of about $56.
4 million in 2018 and like many of the companies discussed prior posted a net loss of about $22.
The company plans massive expansion, with recent launch in Europe and distributors in Hong Kong.
It’s important to note Beyond Meat isn’t unique in its category.
There are many other plant-based food companies to compete with, such as Impossible Foods, Boca Foods, and others.
ZoomZoom Video provides conferencing services widely used by corporate clients.
The service is known for its video conferencing, meetings, chat, and other services.
The company was founded by an engineer from well known Cisco owned competitor WebEx.
The Zoom IPO has been a big success thus far, starting at 62, making its way to about ~80 at time of writing for a market cap of about 20 billion.
Zoom Price DataZoom Financials DumpZoom Income StatementUberUber is the well-known ride-sharing service that offers a product very similar to Lyft.
Uber is the more used service with big plans to integrate food delivery and self-driving into the platform.
Uber experienced about $3 billion in operating loss last year.
Becoming profitable will be a huge mountain to climb, and it will be interesting to see where the stock goes over the next few trading days.
This IPO was too recent so I was unable to gather data from the IEX API.
The stock debuted at $45 on Friday and ended the day down about 8% at $41.
I will attempt to update this section as soon as data becomes available.
ConclusionsI think it’s fair to say the recent wave of IPOs has been quite the wild ride.
The businesses that have been posting reasonable expectations for growth and a path to profitability performed incredibly well.
The stocks with bleak outlooks for profits have really struggled to hold initial share price.
It will be interesting to see where these companies’ stock prices settle over the next few months.
And it will be especially interesting to see where some of these companies are in five to ten years.
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