What turned of 2020’s largest US tech IPOs?

The pandemic halted several US tech IPOs in the first half of 2020, leading to speculation that firms planning to go public would have to wait until 2021. But the market picked up around the middle of the year, turning 2020 into a banner year for US tech IPOs. We look back at the three biggest ones and check how they’ve fared since.

The biggest US tech IPOs of 2020

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With Zomato having whetted investors’ appetites, India is gearing up for a tech IPO bonanza in the second half of 2021, featuring the likes of Delhivery, Policybazaar, Freshworks, Flipkart and Nykaa.

The latter half of 2020 was similarly huge for American tech firms, with three companies — Doordash, Airbnb and Snowflake — making the list of the top 10 US tech IPOs of all time.

top 10 ipos

Not adjusted for inflation. Source: Visualcapitalist.com

Snowflake Inc

Snowflake

Image source: Snowflake

  • IPO date: September 16, 2020
  • IPO price: $120
  • IPO valuation: $33.2 billion
  • First-day close: $253.93
  • Current stock price (July 16): $250.82
  • Current valuation (July 16): $74.27 billion

What it does: Snowflake is a data-warehousing software company that provides cloud-based data storage. Its clients include CapitalOne and Logitech.

Historically, companies have stored data on servers they manage themselves, using software from Oracle and IBM, which have dominated the space.

Rather than help companies store data on their own servers, Snowflake helps them ‘warehouse’ it in the cloud. Crucially, its software makes it easier for businesses to pull insights from the data.

The company was a pioneer in this space, offering this service before Google, Amazon, and Microsoft came up with their own versions.

The IPO: Snowflake’s IPO, one of the largest of 2020, is also the largest IPO ever by a software company.

The company was initially expected to sell 28 million Class A shares for between $75 and $85 each but ended up raising $3.4 billion at $120 a share.

This shot up to $300 on the first day of trading, making Snowflake the largest company ever to double in value on its opening day.

After closing day 1 at just under $254, it continued to climb, hitting a high of $390 on December 8. But by the end of 2020 it had fallen to $281.40.

The stock hit a low of $188.24 in mid-May but has since recovered to $251.55 as of July 16, a shade below its first-day closing price of $253.93.

DoorDash Inc

Doordash.

Image source: DoorDash

  • IPO date: December 9, 2020
  • IPO price: $102
  • IPO valuation: $39 billion
  • First-day close: $189.51
  • Current stock price (July 16): $167.36
  • Current valuation (July 16): $54.53 billion

What it does: DoorDash is a food delivery platform similar to Zomato and Swiggy. Like its Indian counterparts, the company saw its business boom last year with people stuck at home.

None of the three companies on this list have yet turned a full-year profit, but DoorDash’s IPO came in for the most severe criticism. It was named ‘The Most Ridiculous IPO of 2020’ by market research firm New Constructs. The reasons? It’s lack of profitability, stiff competition, a possible pandemic boost that may subside once more people start dining out again, and because “they do not have a way to make money long-term”.

No different from their desi counterparts, then.

The IPO: Despite this, Doordash raised $3.4 billion in its IPO by selling about 33 million Class A shares at $102 each.

Its stock rose 85% on its first day of trading to close at $189.51 a share. But by the end of the year, it had fallen to $142.75.

The new year brought renewed optimism but also increased volatility. The share price briefly crossed $200 in mid-January and mid-February before crashing to $113 in mid-May.

It has since recovered to $167, just a few dollars above its first-day closing price.

It’s also worth noting that the company’s stock price wasn’t affected too much when its lock-in period expired on June 7.

Airbnb Inc

airbnb

  • IPO date: December 10, 2020
  • IPO price: $68
  • IPO valuation: $47 billion
  • First-day close: $144.71
  • Current stock price (July 16): $134.31
  • Current valuation (July16): $82.94 billion

What it does: Airbnb, as you probably know, is an online vacation marketplace that connects vacationers with property owners. Founded in 2008, its business model has upended the hotel industry.

The IPO: In 2019, Airbnb said it would go public the following year. And though the pandemic decimated the travel industry in 2020, the company kept its word and launched what would prove to be the largest US IPO — tech or otherwise — of the year on December 10, a day after Doordash’s debut.

The company raised $3.5 billion in its IPO by selling 51.5 million Class A shares at $68 each. Its share price rose 112% to close at just under $145 on the first day of trading.

After analysts downgraded the stock, it crashed to a low of $124.80 on December 15 but rallied to $163.19 by December 22. But by the end of the year, it was back at day 1 levels — $146.80.

It saw another rally at the start of 2021 and crossed $200 a few times in February and March before hitting a 2021 low of $133.99 in May.

After another dip over the past week, it currently stands at $134.46, which is still almost twice its IPO price.

Let’s move on to other big developments of the week


ETtech DEALS DIGEST

Zomato IPO

L-R: Zomato’s Deepinder Goyal, Info Edge’s Sanjeev Bikhchandani and Sequoia India’s Mohit Bhatnagar

Food delivery and restaurant discovery platform Zomato made history this week by becoming the first Indian startup unicorn to launch a domestic IPO. It was also the most-subscribed offering through UPI since the option became available in 2019, sources told us. Meet the team that steered the company towards its public issue. Also do read our deep dive into Zomato’s IPO offering.

Zomato Journey

Vijay Shekhar Sharma

Paytm parent One97 Communications has filed its draft IPO prospectus with the markets regulator to raise Rs 16,600 crore in what will be the biggest Indian initial public offering in at least a decade. Read our top 10 takeaways from the IPO documents. We also recently took a closer look into what a successful public listing could do for the digital payments major.

Top 5 IPOs

The Gurgaon-based startup — which was valued at $700 million in its previous equity funding round in April, when it raised Rs 150 crore ($20 million) — is eyeing a valuation of $1 billion (Rs 7,459 crore) at its public market listing.The deal will help Reliance Retail capitalise on the 30.4 million listings database of the home grown search provider that also made the country’s first super-app.

Flipkart

The fundraising is expected to give the Walmart-owned ecommerce major significant firepower to expand online shopping and take on well-capitalised rivals such as Amazon, Reliance Industries and the Tata Group.The latest round comes at a time when the hospitality sector in India is yet to fully recover from the impact of Covid-19, even though the bookings are gradually picking up as lockdown restrictions are lifted.

Here’s a quick look at the top funding rounds this week

ETtech Deals Digest

OTHER BIG STORIES BY OUR REPORTERS

Mukesh Bansal N Chandrasekaran

Tata Digital president Mukesh Bansal (left) and Tata Sons chairman N Chandrasekaran

Having struck back-to-back deals to boost its consumer internet play through acquisitions such as BigBasket, 1mg and Cultfit (which is currently a minority investment), the Tata Group is piecing together its first major foray into a new business area after its entry into the aviation sector in 2013.

Young Investors

The upcoming rush of new-age consumer internet companies listing on Indian bourses has piqued the interest of a new crop of millennial and GenZ investors who are more vested in the consumer technology ecosystem.Sources in the government said that while messaging app Telegram has complied with the mandates laid out for significant social media intermediaries by “appointing necessary” officials, rival platform Signal “has not responded” to the letter sent by the ministry of electronics and IT (MeitY).Earlier this month, two advocates filed a public interest litigation against WazirX, Coinswitch Kuber, and CoinDCX, asking the markets regulator to issue guidelines and take steps against crypto exchanges advertising on television without standardised disclaimers.

ESOPs Graphic

Well-funded startups – buoyed by large funding rounds, a meteoric rise in valuations and IPO-driven liquidity events – have started buying back employee stock ownership plans (Esops), giving staff an opportunity to convert paper money into cold, hard cash.

Inclusive Tech

We delve into the tech industry’s attempts at building products for people who are not like them, and find out why the majority still don’t champion accessibility and inclusivity in product design.

Thierry Delaporte

As Thierry Delaporte completes one year as chief executive of Wipro, the Bengaluru-based IT services provider has outperformed larger rivals by posting faster growth in the quarter to June.US businesses will show increased appetite to migrate to the Cloud and adopt technologies such as artificial intelligence (AI) and Internet of things (IoT) in the next few years, leading to increased offshore and onshore outsourcing opportunities for IT services providers.The draft rules, which recognise the industry as one that offers “immense opportunities” for economic growth and employment generation, also do away with several forms and approvals required under the previous regulation.

That’s about it from us this week. Stay safe and get that jab 💉.

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