Question

Recently there has been a surge of IPOs – Snapchat, Carbon Black, Lyft, Huya, Uber (pending), etc. Were they successful and why? What does it take to have a successful IPO?

Answer 1

Recent initial public offerings were not successful because they were issued at inflated valuation and shareholders were not subscribing to those issues because they were highly expensive in nature and they were such companies who are continuously making losses and they are not able to make profits and they are able to attract a large amount of valuation through insider deals, but in the secondary markets when the shares are traded they are continuously updated with their continuous performance and these companies are not able to report profits and they have lost a significant chunk of their listing price.

These initial public offerings were not successful because they were issued at a higher valuation and they do not have a regular profit making business and they are highly exposed to the changing scenario of the macro environment and they do not have a traditional business structure so investors are highly sceptical into investing in such business.

It takes a proper valuation and sound fundamental along with a proper business structure which is sustainable in the long run to have a proper initial public offering and that would be attractive to various subscribers and that should offer value to various subscriber so they can subscribe the initial public offer and they should capitalise upon the growth in the future.