IPO Update: Early August Edition

Morning Markets: The IPO calendar is quiet. Let’s remind ourselves who is supposed to be coming up.

After a busy year, today’s technology and venture-backed technology IPO pipeline is light. But while the present-day pipeline of public IPOs is low there are a few big offerings that are expected to land shortly. So let’s examine both this morning.

Upcoming, Expected

The upcoming IPO pipeline (Crunchbase News tracks tech and venture-backed offerings on U.S. exchanges, including companies headquartered in other countries who choose to float here) contains a single, known offering. It’s WiMi Hologram Cloud, a China-based company that is expected to raise around $34 million in its debut.

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And that’s where the expected roll ends. It’s a short list. You can pick a reason why, but what matters is that the unicorn IPO run has come to a pause. So, let’s look at who is supposed to get out soon.

Big Names

There are two large, expected tech and venture-backed IPOs coming later this year that we have have our eye on, those belonging to WeWork and Cloudflare.

WeWork is expected to go public in September. The company is fitting a number of pieces together for its debut. First, it’s raising debt to avoid an oversized IPO. Why is it raising debt before it goes public? As WeWork consumes cash to operate, it needs to raise capital in its public offering. Raising debt before is a way to limit future equity dilution.

As we’ve mentioned on these pages quite often, WeWork’s rich valuation may prove difficult to defend when it goes public. The company will stress its growth (fast!), its growing stable of software tools (neat!), and the economics of its buildings once occupied (supposedly good!). Against it are public-market comps that are priced very differently, and staggering losses.

Not since Uber have we looked forward to an S-1 more.1

Cloudflare is a simpler beast. Back in the news over its decision to end digital protection for the odious 8chan, Cloudflare is a critical part of how the Internet works. Therefore, its numbers will also be incredibly interesting. Cloudflare most recently raised $150 million at a $3.1 billion pre-money valuation, meaning that its public offering will be sizeable.

The latest regarding Cloudflare’s offering is that it filed privately this summer, and will float in September (credit to BusinessInsider for breaking the news). This IPO won’t make the same splash as WeWork’s own, but I am stoked at the prospect of checking out the company’s gross margins.

And that’s where the list of expected, major offerings ends this morning.

There are other, anticipated offerings, but it’s a somewhat soggy list. Here are some companies long expected to go public, and why we don’t anticipate incipient S-1s:

• Robinhood: This company just raised a bunch of money at a new valuation. It’s busy putting that money to work. And, given media coverage of some of the firm’s internal dysfunction that led to the embarrassing “bank account” situation, the company probably still has some growing up to do before it goes public.
• Postmates: Postmates has filed, but we haven’t heard anything regarding its public S-1 landing soon. Not that we wouldn’t welcome such an occurrence, we just don’t see it happening in the next month or two. You can read our latest coverage of the company’s IPO march here. (The Postmates S-1 will be fun not only because Postmates is itself a neat company, but because it will also shed light on the on-demand space in new detail.)
• Airbnb: Towards the end of every year every publication says that Airbnb could go public in the coming annum. And here we are, with no public Airbnb shares yet again.
• Peloton: A dark horse in the IPO chronicles, the social-media popular in-home exercise, and bragging-rights company is going to post an IPO document in time, detailing a mix of hardware (stationary bikes! treadmills!) and software (recurring fees for digitally-delivered classes) that will generate a fascinating blended gross margin figure. We’re stoked. But here again, other than expectant scuttlebutt there isn’t too much to report.

What we do expect are more SaaS-style offerings from mid-range unicorns. Yes, SaaS stocks have had a tough run of it over the last few days, but the category is still valued historically-high multiples.

There’s a jinx factor in saying that some companies aren’t set to go public quickly. I’m fine with that. If I accidentally induce, say, Postmates to publicly file then I’ll have committed a public service. More when we get any sort of new S-1.

Illustration: Dom Guzman