Unicorn IPOs Have Incinerated $45 Billion This Year

The proposed WeWork IPO has totally collapsed.

Founder Adam Neumann is out as CEO, and the company has slashed real estate deal activity and fired staff. The company’s credit rating has been cut to B-, and its bonds are plunging. Softbank recently valued WeWork at $47 billion, now some analysts say it may be worth much closer to zero.

Unlike Softbank, stock market investors dodged a bullet with WeWork. But unicorn IPOs have crushed investors this year regardless. In fact, looking at ten of the biggest IPOs of 2019, collectively, they’ve blown through the same amount of value as WeWork: $45 billion.

$44.7 Billion Of Losses… and Counting

I ran through ten of this year’s biggest IPOs to date, including the good, the bad, and the truly awful. It’s easy to think about Beyond Meat and assume that IPOs are doing alright this year. But quick, name another big winner this year. You probably can’t.

Former high-fliers like CrowdStrike and Zoom Video have come back to earth recently. Meanwhile, big dogs like Uber and Lyft plunged from day one. Put it all together, and the scorecard for this year looks painful:

The unicorns have lost nearly $50 billion so far in market cap this year. | Author’s calculations, data from Finviz.com

It’s important to realize this data uses the first price that these stocks traded at publicly. Wall Street likes to make a big deal of the official IPO price that professional funds and connected individuals can purchase stock at. Beyond Meat, for example, IPOed at $25, but the general public never had a chance to buy below $45. Lyft IPOed at $72, but started trading at $87, maximizing losses for the general public.

Could You Have Made Money In 2019’s Unicorns?

Beyond Meat is the real IPO money maker this year. Nothing else comes close.  | Image: Shutterstock

Anyone that bought Beyond Meat on opening day and ignored the rest of the year’s unicorns has made a fortune. If you invested in several unicorns, however, the odds of success dropped sharply.

That said, if you bought 100 shares of every unicorn on this list, you would have made a grand total of $1,000 to date, with your $10,700 Beyond Meat gain being almost totally erased by the rest of the year’s losers. If you had missed Beyond Meat, you’d be deeply in the red.

As it is, investors lost far more in the likes of Uber and Lyft than they made in Beyond Meat – those IPOs were far larger and more hyped whereas Beyond Meat flew under the radar at first. As you can see from the totals, market cap losses in Uber alone more than canceled out the collective wins of Beyond Meat, Zoom Video, and Pinterest.

The Losses Aren’t Done Yet

Last week’s Peloton IPO is adding to the bleeding. The smart bike maker started trading at $27 on Thursday and already dropped as much as 10% from its opening levels to add another nearly half billion to 2019’s unicorn losses. And don’t forget the near misses. Juul is burning up billions of dollars, though Altria is taking the losses there, not IPO investors. Additionally, WeWork would have added a huge sum to the unicorn’s combined losses if its IPO had been successful:

This joking tweet ended up coming true. | Source: Twitter

Other private companies that had been considering IPOing have either pulled their offerings or are laying low for the time being. So don’t plan on investing in that Airbnb IPO anytime soon.

Last modified (UTC): September 28, 2019 7:56 PM

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