Failed IPOs are growing and shows market problems

17 thg 1, 2020

2019 was a busy year for various IPOs. While most of the most anticipated placements, for example, Uber, Lyft, Pinterest, and many others could not meet market expectations.

• Uber entered the stock exchange in May, then its shares cost $45 apiece. Six months later, in early November, they are valued by the market at $27. 40% drop.
  
  
  
• Uber's main competitor in the U.S. market, Lyft, in March 2019, placed its shares on the Nasdaq exchange for $80. At the beginning of November, papers cost about $43, having fallen in price by almost 50%.
  
  
  
• Pinterest (social network for the publication and exchange of images). After the IPO, the stock price rose to $37, but by November fell to $19.
  
  
  
• Beyond Meat (the largest producer of vegetable meat). After the IPO, the stock price rose to $235, but by November quotes fell to $80.
  
  
  
• New York Peloton Interactive Inc (upscale exercise bikes). After stocks rose to $ 37, by December their price dropped to $ 26.
  

SmileDirectClub (offer alternatives to classic orthodontic braces). Raised $ 1.35 billion during the IPO. But after that, the company's shares fell by more than 40% compared with the offering price.

And this is only the most resonant cases in which at stake were billions of dollars.

As a result, the percentage of failed American IPOs reached 80%. In modern history, this was only once - on the eve of the collapse of the dot-com bubble.

Revalued IPOs usually occur at the end of a long bullish period when stocks generally become very revalued. This is because investors are finally losing touch with reality and are ready to buy shares on promoted stories instead of facts. Well, investment bankers take full advantage of this, selling companies to investors at inflated prices.

This situation is another sign that the price bubble in the US stock market has reached its peak and is close to collapse.

Recall that we consider 2019 the last year of unjustified growth in the US stock market. Already in 2020, it will begin to adjust. The scale of correction is from 50% and higher. Given that in recent years, shares of technology companies in the US stock market have grown by an average of 7-8 times (and some issuers have shown growth of 10 or even 20 times), the US stock market will no doubt become the object of massive sales. We recommend participating in this process, selling both the market as a whole (Nasdaq index) and the shares of individual issuers (Apple, Microsoft, Alphabet, Oracle, etc.).