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FORTUNE.COM // NOVEMBER 2019
MARKETS
A Year of Listing
Dangerously
The lessons we learned from the latest batch of
unicorn public offerings. By Anne Sraders
AS 2019 DAWNED, the IPO calendar
looked promising—privately held
“unicorns” with valuations over $1 billion, like Uber,
Lyft, and Peloton, were all poised to make a splash
in the markets. But as each company flew the nest,
public investors were increasingly realizing there
was a huge pricing problem.
LEISURE
professor of finance at
NYU’s Stern School of
Business, says pricing
depends on mood and
momentum—and this
year, “the momentum
shifted.”
Following catastro-
phes like WeWork’s
pulled IPO and Lyft’s
and Uber’s flops, Rao
maintains bankers will
have to “be more pru-
dent.” But while most
of the year’s IPOs are
off at least 10% from
their debut prices, in-
vestors shouldn’t dis-
count them altogether.
“We’ve got to be care-
ful not to then assume
that every one of these
companies is worth-
less,” Damodaran
says; investors must
do their due diligence
on each. Still, markets
move in cycles—and
some aren’t optimistic
investors are so easily
taught. As Damoda-
ran states, “Markets
have amnesia.”Lyft beat Uber to
the punch by debuting
in March. But follow-
ing an IPO-day bump,
the stock traded down
nearly 30% in its first
two months. Uber
fared similarly, losing
20% of its value since
its debut in May. And
after fitness company
Peloton closed 11%
down on its first day in
September, the trend
became clearer—trad-
ers were not willing to
validate lofty private
valuations.
Private investors
largely failed to price
these companies in
the later rounds of
their fundraising, says
Santosh Rao, head of
research at Manhattan
Venture Partners.
“If you don’t do it,
the public market is
going to do it and
punish you.”
Aswath Damo-
daran, the so-called
dean of valuation andAT STEAMBOAT Ski
resort in Colorado,
hungry skiers and
snowboarders can
use an app to track
down the “Taco
Beast,” a roving
food truck set atop
a snowcat. A techie
gimmick for sure,TECH MEETS TACOS
ON THE SLOPES
but part of a larger
effort by resort
conglomerate
Alterra to stave off
decline in the ski
industry. Shifting
leisure habits and
high prices (single
day passes can
now cost almost
$200) are part of
the problem. So too
are climate change,
which threatens
to shorten oreliminate the ski
season, and aging
baby boomers,
who long made up
the nucleus of the
sport but are now
increasingly too
fragile to pursue it.
In this context, Taco
Beast and other
gimmicks may
help slow skiing’s
decline. They likely
won’t. —JEFF JOHN
ROBERTS