It’s been a long time coming, but an initial public offering from one of the fastest-galloping unicorns is expected in early 2017, and some observers expect it could lead to a stampede of big-name debuts.
The star unicorn IPO is coming from Snapchat owner Snap. It’s arguably the most anticipated IPO since Facebook (FB) had its blockbuster debut in June 2012, and could be the biggest since China’s Alibaba (BABA) raised a global record $25 billion with its September 2014 IPO.
Snapchat is among the biggest unicorns, a name given to privately held companies valued at $1 billion or more. And it’s no pony. Based on its last investment round, Snap has a market valuation of a whopping $18 billion. And it’s become a major competitor for social networking leader Facebook and its Instagram video- and photo-sharing site. Facebook has added features to Instagram to take on the Snapchat challenge. In 2013 it was widely reported that Snapchat turned down a $3 billion buyout offer from Facebook.
Other possible unicorns coming to the stock market soon are Spotify and Pinterest, though perhaps not yet the two biggest unicorns, Uber or Airbnb.
After 2016 proved to be the slowest IPO year since the Great Recession, investors hope to lasso their share of unicorns in 2017.
“Right now we’re incredibly busy talking to a lot of companies planning offerings,” said Jeff Thomas, head of Western Region Listings at Nasdaq. “There is a lot of pent-up supply. We expect a good year.”
That, however, will greatly depend on stock market trends, always the critical factor in IPO activity and success. If the postelection rally continues, more companies likely will take the plunge, and more are likely to have successful IPOs.
IBD’S TAKE: IPOs are a seedbed of innovation and can be huge stock winners. The stock also can reverse quickly. So keep track of IBD’s IPO Leaders column. IBD can also help you understand strong IPO bases. You can also read this Investor’s Corner to maximize your chances for success with IPOs.
The 105 IPOs in 2016 were down 38% from 2015, which itself was a weak year for new issues. The proceeds raised from the IPOs also fell 38%, to $19 billion. The last big year for IPOs was 2014, when 275 U.S. debuts raised $85 billion. That was the most new stocks since the 406 that went out in the 2000 dot-com bubble year.
Despite the challenges, 2016 had some tech IPO winners. The top-performing tech IPO was optical components supplier Acacia Communications (ACIA), which peaked on Sept. 7 at 128.73, up 460% from its May IPO price of 23. Acacia has lost about half its value since then, but is still up 164% from its offering price. 60.69 on 1-5, check when runs
Other solid 2016 tech IPOs include Twilio (TWLO), Nutanix (NTNX) and Impinj (PI).
Twilio, whose cloud-based software platform provides real-time messaging services for businesses, priced its IPO at 15 and popped 92% on its first trading day in June. The stock hit an all-time high of 70.96 in September but has since pulled back to about 28.
Impinj shares are up nearly 140% from their IPO price of 14, closing Thursday at 33.16. Impinj designs…