People line up for t-shirts at a Robinhood online brokerage pop-up kiosk along Wall Street after the company went public with an IPO earlier today on July 29, 2021 in New York.
Spencer Platt | Getty Images News | Getty Images
This year’s tech IPO bull market has turned into a bear.
The recent drop in stocks of high-value, high-growth, money-losing companies led to a massive sell-off of companies that hit the market in 2021. CNBC has identified 55 tech companies that got their start. in the United States this year thanks to an IPO, special object acquisition company or direct listing. Only one of them, GlobalFoundries, is less than 20% of its hefty price tag.
This means that the rest are in bear market territory, generally defined as a drop of 20% or more from their peak. Ten of those businesses have fallen by at least that much over the past week.
Worse yet, 23 of those companies have lost half or more of their value since peaking, including Robinhood, which fell 74% from its peak in early August, and LegalZoom, which plunged 58% since its peak in July. All prices are at the close of Monday.
Investors who choose a basket of offers in the hope of building a diversified portfolio have not found a safe haven. The Renaissance IPO ETF, which tracks stocks of companies that have gone public in recent years, has fallen 18% in the past three weeks and down 26% from its February record. The index main titles are Moderna, Uber, Snowflake and Zoom.
Across the tech sector, rising inflation and the threat of higher interest rates are hitting companies that will need additional external capital to subsidize growth. In the investor flight to safety, those hardest hit are employees and other insiders of companies that have not yet passed their post-IPO blocking period, which typically lasts up to six months after the offer. .
Rivian insiders, for example, are locked away until mid-2022, leaving them fully exposed to the 35% drop in the electric vehicle maker’s stock since mid-November. Freshworks, a competitor to Salesforce, is down 50% from its peak last month, and insiders are barred from selling until early next year.
Cloud-based software provider GitLab, down 35% from its peak in November, is also expected to hit its lockdown expiration in early 2022. The news escalated for GitLab employees on Monday, when the action took dropped an additional 9% in extended trades. GitLab had better than expected revenue in its first quarter as a public company, but that didn’t seem to matter.
For some newly listed companies, lockdowns are not a problem. This year, half a dozen U.S. tech companies went public through direct listing, allowing existing investors to sell immediately rather than adding cash to their balance sheets.
Although still used by a small minority of venture-backed companies, direct listings have gained traction this year. Before 2021, only four notable companies – Spotify, Slack, Palantir and Asana – had chosen this route to the public market.
This year Roblox, Coinbase, Squarespace, ZipRecruiter, Amplitude, and Warby Parker debuted via direct listings. Everyone’s stocks are down 20-50% from their peaks, but employees have had the opportunity to sell their acquired stocks on the open market from day one, cashing in at least a portion of their earnings.
Technological SPACs have been just as problematic for public investors as IPOs and direct listings. Auto insurer Metromile, whose technology allows drivers to pay per kilometer rather than a monthly fee, suffered the largest drop in the IPO group, falling 89% from its February high soon after. the finalization of the SPAC merger.
Among other PSPC listings, neighborhood social network Nextdoor is at 47% of its November high, and online lender SoFi has fallen 44% in 10 months. Media site Buzzfeed was not included in the data for this story because the company just completed its PSPC merger on Monday. But it was a troubling start, with the title dropping 11% on its opening day.
The tech market price review could impact the few remaining IPOs this calendar year, and possibly into 2022.
HashiCorp is expected to go public this week, and the cloud infrastructure software company is targeting a valuation of around $ 13 billion, based on its initial price range. However, those expectations were set last week, before the tech market collapsed, and investors can now pay more attention to the company’s $ 22 million loss in the last quarter, which s ‘is enlarged from $ 9.3 million a year earlier.
Next week, Samsara, whose technology connects physical products to the cloud, is expected to debut with a valuation of around $ 11.5 billion, according to his updated flyer published Monday. Samsara’s loss narrowed to $ 32.4 million in the last quarter from $ 54.3 million in the prior year period.
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