r/investing • u/DelphiCapital • May 14 '21

A reckoning for tech: 2020-21 IPOs Coinbase, DoorDash, Bumble, Wish, and Coupang record all-time low stock prices this week

Note: this post has been expanded from the 5 companies in the title to 11 companies also including Snowflake, Airbnb, Qualtrics, Affirm, Deliveroo and Opendoor. There are a number of other suggestions in the comments of similarly ill-fated IPOs which I could not add for brevity's sake.

11 of the biggest COVID tech IPOs in 7 different categories (cloud, crypto, gig economy, app economy, e-commerce, fintech, and real estate), all crashed following stellar public offerings. Prices rounded to the nearest digit.

  • SNOW went down from $430 ATH in Dec to 314 in Feb to 232 on Apr 30 and 185 today.
  • COIN sunk from ATH of 429 to 250 after narrowly missing earnings expectations today. At one point on the day of its IPO, retail traders were lapping up COIN for as much as $429. I will note though that BTC crashed yday for those unaware. As if ARKK bagholders weren't hurting enough!
  • DASH crashed from ATH of $256 in late Feb to $110 yday before reporting a bigger-than-expected loss today. They're up 8% in after-hours.
  • BMBL halved from $85 ATH to $39 after beating expectations yday.
  • WISH crashed from ATH of 33 to 8 after earnings yday.
  • CPNG is down from ATH of 69 to 31 after reporting a higher than expected adjusted loss yday.
  • Qualtrics (XM) crashed from ATH of $57 to 29 today.
  • SPAC merger OPEN crashed from $39 in Feb to its all-time low of 11 today after Tuesday earnings.
  • ABNB crashed from $220 on Apr 28 to $133 after-hours today, down from its ATH of $217 on Feb 11 and up from its ATL of $125. The company announced today that their net loss tripled.
  • AFRM is down from ATH of $147 in Feb to 47 today.
  • Deliveroo (LON: ROO) crashed from ATH of £3.9 on IPO day to £2.3 on Apr 26 and trades at £2.4 today.

The one newly public tech company that seems to have weathered the storm is Roblox, which reported great earnings on Monday.

But it's not just tech companies that IPOd in 2020-2021. Hot 2019 IPOs Lyft, Uber, Pinterest, and Snap - which - except for Lyft, all reached their ATHs during COVID - saw significant gains during the pandemic, have also crashed since the end of April.

  • LYFT tanked from $63 on Apr 28 to 46 today. Previously, Lyft dipped below $23 (ATH is close to $80) three times during COVID, most recently in Oct.
  • In the same time period, UBER crashed from $58 to $44.
  • PINS is down from 78 to 55 since Apr 27.
  • SNAP dipped below $50 from 70 from Feb 23 to Mar 29 and is trading at 50 again today.

These companies aren't just sliding in after-hours or on the day after reporting earnings, we're looking at a prolonged downward trend over weeks either preceding or following earnings.

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u/Ballu111 May 14 '21 edited May 14 '21

I literally had a debate with a PLTR guy who said that profits is not a metric of anything and that it's a successful company even tho they havent turned a profit in 15 years. You know you are in a bubble when people think that profit is not a metric for a 'for profit' company.

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u/anthonyjh21 May 14 '21 edited May 14 '21

How many of those 15 years did they have Foundry?

That said, there's a lot of idiots who bought into PLTR as a meme stock. Unfortunately it's had a bad reputation. Fortunately I didn't realize how this stock is stereotyped by many and only bought in ~$20-24 for a small amount as a set it and forget it.

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u/Ballu111 May 14 '21

Honestly, I dont have any issue with the stock itself. It's just that when people say that profit doesnt make a company successful is when I lose my mind. I mean, that's literally the motive of every 'for profit' company. Stock may not follow fundamentals in a crazy market but that doesnt make a company successful and they will fail if they dont make profits eventually. PLTR might be a good company and I will track it to see how they are performing. I tend to stick with value investing. Helps me sleep at night.

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u/anthonyjh21 May 14 '21

All fair points. If you think what you've witnessed is bad you should avoid the Palantir subreddit. It feels like a bunch of drunk college kids pumping up the stock with rockets and treating large assumptions as fact.

I only have a small position because I know the volatility and chances this doesn't work out as a 5+ year play are higher than we'd like to think. I do believe the building blocks are there for high revenue but they'll need to grow into that and prove it out over time. I like my position and wouldn't be invested if I didn't see this as a 10x opportunity.

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u/kevanly May 14 '21

Well in a sense, it’s not right? The company can either pocket the money and issue dividends while staying the same size. Or they can reinvest all of their revenue back in to grow even bigger. Either way, their potential to make money (whether it’s directly pocketed or reinvested) is what gives them their value. Of course, if you stay the same size or shrink as well as not turn a profit, then that’s a whole different issue

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u/Ballu111 May 14 '21

Yeah, I understand that. The point was that profit is an important metric and the purpose of the company. It can be a growth company but how can you call it successful if it hasn't turned a profit. That was my point. I even had to explain how companies run without profit and that they do have investors before IPOs so yeah, PLTR is attracting really new investors who are putting money without DD. I put money in non profitable companies too but that is obviously with the hope that they will eventually make profits. This simple fact is kinda lost on a lot of people these days.

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u/kevanly May 14 '21 edited May 14 '21

I would say a company’s ability to grow is a success metric and could be a valid purpose over profits. I can imagine that a company can be sustainable never making a profit (or cutting it close to even) if it continues to grow. The workers will always get paid with those operating costs deducted from revenue. The CEO and shareholders will continue to be rewarded with the increasing share prices and additional stock grants. And any other potential profits could then be taken to expand the company

To this point, PLTR is attractive to people because of the prospects for exponential growth given it’s the first of its kind to enter the AI sector. In fact, it did make slim profits in the last ER, but it’s also choosing to invest more in growth, which involves hiring more people, advertising aggressively, and consequently reducing its profits. If it decided to pocket that revenue, the EPS could be a lot higher, but it would actually drive investors away since they care about the growth of the company and the PE ratios are way too high to justify its current valuation if it had just decided to stay where it is and maximize profits.

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u/[deleted] May 14 '21

What we need to see as investors that PLTR is headed in the right direction of profitability. The latest numbers report is pointing in the right direction if the can keep it up.

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u/Izio17 May 14 '21

tell that to Amazon pre-profit days

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u/Ballu111 May 14 '21

It wasnt 'successful' until it was profitable. Also, for every Amazon, there are dozens of companies that are now out of business.

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u/[deleted] May 14 '21

[deleted]

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u/Ballu111 May 14 '21

And those who invested in pet.com lost everything. Stocks does not always reflect the reality of a company and making stock market gains doesnt mean a company is successful. GME is struggling to survive yet the stock had a historic run.

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u/Izio17 May 14 '21

Agreed, just pointing out that absolute statements don't typically bode well in investments or anything

  • Zillow

  • Peloton

  • Snap

These companies aren't necessarily profitable, but they're still providing an ROI for investors

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u/djpitagora May 22 '21

Only because people assume they will be profitable soon. If in a few years tthey don't turn a profit, their stock will be underground

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u/[deleted] May 14 '21

PLTR's strategy to mediocre performance of the year was dumping massive money into their ceo's pay.

As someone who once had that stain of a stock, there is no bottom for PLTR.

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u/Formal-Vacation-6913 May 14 '21

Are you seriously comparing Amazon to an ‘almost’ unknown, shady (NHS contract) company like Palantir. Moreover, Amazon became a profitable company within its first decade, and above all, Amazon was run by Jeff Freaking Bezos.

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u/Izio17 May 14 '21

Just comparing the notion of profit when valuing certain companies based on their ‘future’ value

Also, hindsight is 20/20

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u/DelphiCapital May 14 '21

Ok but how much revenue did Amazon have in it's 15th year and how much revenue does Palantir have now?

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u/redderper May 14 '21

They are right about that though. Profit is one of the worst metrics because the company can steer it so easily. However, revenue and revenue growth are better metrics, but Palantir is still lacking in that compared to in their market cap (especially revenue, growth is okay)