As a digital marketing professional, I have always been fascinated by the world of Initial Public Offerings (IPOs). These are exciting times for companies that are poised to go public, and for investors who are looking to get in on the ground floor of a promising venture. In this article, I will be taking a closer look at the companies that had their IPO in 2018, including Spotify and DocuSign, and examining their journey from private to public ownership.
Introduction to IPOs
Before we dive into the companies that had their IPO in 2018, let’s first take a step back and look at what an IPO is, and why companies choose to go public.
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What is an IPO?
An Initial Public Offering, or IPO, is the process through which a privately held company offers shares of its stock to the public for the first time. This is typically done through an underwriter, which is a bank or financial institution that helps the company to price and sell its shares.
Why do companies go public?
There are a number of reasons why a company might choose to go public. One of the primary reasons is to raise capital. By selling shares of its stock to the public, a company can generate a significant amount of cash that can be used to fund growth and expansion.
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Another reason why companies go public is to provide liquidity to their existing shareholders. When a company is privately held, it can be difficult for shareholders to sell their shares. By going public, these shareholders can sell their shares on the open market, which can be a much easier and more efficient process.
Finally, going public can help to raise a company’s profile and increase its visibility. This can be particularly important for companies that are looking to attract new customers, partners, or employees.
Benefits and drawbacks of going public
While there are certainly benefits to going public, there are also some drawbacks that companies need to be aware of. One of the biggest drawbacks is the increased regulatory and reporting requirements that come with being a public company. Companies that are publicly traded are subject to a wide range of regulations and reporting requirements, including regular financial reporting and disclosure of material events.
Another potential drawback is the loss of control that comes with going public. When a company is privately held, the founders and management team have a great deal of control over the direction of the company. When a company goes public, however, it is subject to the whims of the market and its shareholders.
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Companies that had their IPO in 2018
Now that we have a better understanding of what an IPO is and why companies go public, let’s take a closer look at the companies that had their IPO in 2018.
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Spotify – A case study
One of the most highly anticipated IPOs of 2018 was that of Spotify, the popular music streaming service. The company went public on April 3, 2018, in a direct listing on the New York Stock Exchange [1][3]. It was considered a success with the stock trading above the initial price range [1]. The stock price jumped 22 percent to $161.44 in the minutes after it began trading [2].
References:
[1] Spotify’s IPO disrupted Wall Street. What lies ahead now for … [2] Spotify Goes Public With a $30 Billion Market Cap [3] Spotify Case Study: Structuring and Executing a Direct ListingOne of the most interesting things about Spotify’s IPO was the fact that the company chose to go public through a direct listing, rather than a traditional IPO. In a direct listing, a company’s shares are listed on an exchange and are available for trading, but the company does not issue new shares or raise any new capital.
Despite this unconventional approach, Spotify’s IPO was a success. The company’s shares opened at $165.90, well above the reference price of $132.00, and the company was valued at nearly $30 billion.
DocuSign – A case study
Another notable IPO from 2018 was that of DocuSign, a company that provides electronic signature technology and digital transaction management services. The company went public on April 27, 2018, and raised $629 million in its IPO.
The DocuSign 2018 IPO was a success, with the stock ending the first day of trading up 37% from its initial-public-offering price of $29 [1]. It was considered a highly valued company at the time of its IPO [2]. Interestingly, just two years prior, DocuSign was struggling to find a CEO [3].
References:
[1] DocuSign stock soars after IPO as cloud fever continues [2] Twice as many tech IPOs in 2018 as there were at this … [3] E-Signature Leader DocuSign Couldn’t Find A Boss Two …One of the reasons why DocuSign’s IPO was so successful was the fact that the company is a leader in a rapidly growing market. As more and more companies move their operations online, the demand for electronic signature technology and digital transaction management services is only going to increase.
In the weeks following its IPO, DocuSign’s stock price continued to rise, and the company’s market capitalization reached $6.4 billion.
Other notable companies that went public in 2018
In addition to Spotify and DocuSign, there were a number of other notable companies that had their IPO in 2018. Some of the most interesting include:
- Dropbox, a cloud storage company that went public on March 23, 2018, and raised $756 million.
- Xiaomi, a Chinese smartphone maker that went public on July 9, 2018, and raised $4.7 billion.
- Eventbrite, an event management and ticketing platform that went public on September 20, 2018, and raised $230 million.
How the market responded to these IPOs
So, how did the market respond to these IPOs? Overall, the companies that had their IPO in 2018 performed quite well. According to data from Renaissance Capital, the average 2018 IPO returned 14.5% through the end of the year, compared to a decline of 6.2% for the S&P 500.
Of course, there were some exceptions. For example, shares of Dropbox fell by more than 25% in the months following its IPO, as investors expressed concerns about the company’s competition and growth prospects.
Conclusion: The future of IPOs
So, what does the future hold for IPOs? While it’s impossible to say for sure, it’s clear that the IPO market is still alive and well. Despite some high-profile failures and concerns about overvaluation, companies continue to see the benefits of going public, and investors continue to be willing to bet on these companies.
As we move forward, it will be interesting to see how companies approach the IPO process. Will we continue to see more direct listings like Spotify’s, or will traditional IPOs remain the norm? Only time will tell.
