There are 5 S-1 posts on the front page, what explains the rush?
Is it just because the stock market is doing "well" right now or is there some other explanation?
I understand the stock market very poorly and had the same question myself, so this may be way off the mark, but I wonder if it's because of pessimism in the economy that non-public investors are harder to milk right now. It's unusual to see this many S-1's on HN, even more unusual that I've heard of most of them before.
I might be able to provide context as a money manager and employee of a pre-IPO startup that considered IPOing right now.
Companies prefer to IPO when they show the strongest growth as it likely will lead to the highest valuation at time of IPO -- regardless of other fundamentals (such as profitability). These companies are likely doing very well for a combination of reasons:
- Lockdown has increased use of their services
- The market is in a large upswing right now
This makes their growth look phenomenal to investors, and likely, their board members who want to cash out see this as an opportunity.
There has been a bit of a "dead zone" for around the last year with people thinking the market was going to slow down for a recession and it has been considered hard to "raise money". A lot of people also believe a longer recession is still coming (I'm one of them).
This means that we likely have a short window where growth / income look fantastic for a few companies. The next opportunity might be in 2-3 years.
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Also, as an investor, I think this is terrible practice as I believe the fundamentals of the investment are far more important than black swan-type of events giving you a growth spurt.
Asana lost 120m last year
Snowflake lost 350m last year
Unity lost 160m last year
Sumo Logic lost 43m last year
Jfrog lost 400k last year
Out of curiosity, is it normal for companies to IPO this far away from profitability, or is this a recent tech thing? I feel like it was a big deal when uber IPO'd so far away from profitability, now it seems standard.
I remember the same thing happening last year at the same time (late august), so my guess is that it that this timing has something to do with financial optimization of S-1 filings.
When prices are high, people sell. Simple as that.
It is nothing more than a greatly-timed opportunistic race to the finish. The same rush happened in August and September 2019 and right now they are at it again, before they lose out as they nearly did due to the virus and also towards other uncertain characteristics happening in 2020.
Yes, basically stocks are very high considering that economic collapse is a likelier possibility than it has been in a while. So companies that were trying to pick the right time to IPO are filing now to get that green in the bank before the market implodes.
This is actually pretty normal, unless there has just been a crash:
https://www.nasdaq.com/market-activity/ipos
If you start studying the capital markets you'll quickly learn just how little you've known about the economy before. Look at any object on your desk - know how was that thing made? Someone out there has manufactured the thing, there was a few if not a few dozen corporations involved.
Have you seen the stock markets recently? Apple has market cap of 2 Trillion dollars. Just a little piece of that will fuel a business's growth.
Trying to take advantage of all the capital available and momentum in the market. Same thing happened the couple years before the dotcom bust in 2000.
Trying to cash out before capital gains taxes rise?
Is more public companies a good thing or not?
Probably because tons of money can be taken off the table for all these over pumped companies in the stock market and plowed into the hot new things.
SPACs are playing a huge part too.
I imagine trying to get them in before November 3rd
Trump's capital gains tax policies that have deprived our government of vital revenue are increasingly likely to go away next year. Rich people have bribed the Republican party for decades to make it so that "investment" income is taxed at ~15% vs ~25% for the working person's hard earned income.
They should be hidden from the homepage. I stopped visiting TechCrunch a very long time ago when the majority of their posts became fundraising news.
No, whether something is on front page is not really affected by stock market (though HN algorithm is closed so it may actually be, but unlikely). The main reason is, someone shared link to S-1 and others upvoted it