If you’d predicted in late March and early April that Q3 would kick off with a wide-open IPO market and receptive investors, I doubt anyone would have believed you. If you suggested that valuations would look pretty good as well, you might even have been laughed at.
And yet, here we are.
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Yesterday Lemonade and Accolade priced above their expected ranges, with Lemonade pricing above its raised range and Accolade selling more shares than expected. It’s hard to read the moves as anything other than the market demanding growth-oriented equities and not worrying too much about profitability.
Or more precisely: it’s the golden moment to go public for unprofitable unicorns seeking liquidity but worried about defending their private-market valuations. This sentiment is backed up by Agora’s solid pricing and explosive debut in recent days.
How long this public market moment will last is not clear. With the United States recording 50,000 new COVID-19 cases in a single day yesterday and the national economy beginning to slow once again, perhaps the window is short. Perhaps not — we were wrong before about the IPO market in 2020, so let’s not get too hasty to make more predictions — but it is clear that Q4 2019 wasn’t the only time when unicorns might have been able to attract the prices they wanted.
This morning let’s briefly go over the final pricing for Lemonade and Accolade, and give them new revenue multiples ahead of their first days as trading entities. We need to start their public life knowing how they were valued ahead of their debut so that we can better understand the next set of companies that are bold enough to get off their backside and go public.
Roll out the welcome mat
We’ve abused every possible IPO metaphor in recent weeks. Open windows. Warm waters. But without cliché, we can state that IPOs are performing very well in recent weeks, with IPO Boutique reporting this morning that 17 of the last 27 IPOs have priced above the range that they first set.