Morning Markets: Let’s talk about three things that are happening now in the world of private companies.
We’ll have some coverage out shortly regarding the newest mega-rounds, but I wanted to bring up a few newsy items not directly related to raising money this morning.
First, the latest from Postmates, a company that is in the process of going public. Second, a note on what we’ve been watching in the crypto space. And, finally, a question regarding which private companies will report partial results regarding their second-quarter performance.
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The first will help us understand the IPO market, the second will help us grok what’s going on with crypto-related startups, and the final issue could help shape how we view which decacorns are ready to go public. Let’s go!
The Postmates IPO
Yesterday at a Fortune event, Postmates CEO Bastian Lehmann made a few comments on his company’s IPO process, and rumors concerning a possible sale of the company. (He was also on stage to talk about the company’s wheeled delivery vehicles.) Asked about going public, he said while he couldn’t comment, he would “love to take Postmates public.”
The answer was unsurprising given that Postmates has filed to go public. But when asked about articles noting that his company might sell to a rival, Lehmann had several interesting things to say. First, that his company is “growing twice as fast as Uber Eats, as GrubHub.” Pinning down what “growth” means won’t be easy (revenue? order volume?), but the claim that the delivery-focused service is growing more quickly than larger, more valuable rivals is notable.
Lehmann also said that “if you take the necessary steps to prepare your company to go public you will get inbound” interest. This rings true, as we’ve seen some high-profile acquisition deals land right before some IPOs in recent years; it isn’t clear if Postmates is as healthy as AppDynamics was before it was snapped up on the eve of its public offering, but that Postmates is answering the phone, instead of making calls matters.
Regarding what to do with possible deals, Lehmann said that his company always takes a “look” at such interest, and then makes “the smart decision.”
Summarizing, the Postmates IPO is still on provided that a larger company isn’t willing to cut an outsized check to snap up Postmates. At least that’s the sentiment that Lehmann was hoping to cultivate. Regardless, let’s see the S-1.
Crypto: Up And Down
After an up year (2017) and a down year (2018), the world of cryptocurrencies was quiet in early 2019, before bitcoin and other popular blockchain-based products saw their prices quickly appreciate this summer. The value of a single bitcoin pierced the $13,000 mark before falling back under $10,000.
If you aren’t into watching the cryptocurrency markets around the clock (shame on you if you aren’t; shame on you if you are) you’ve missed the latest action. But don’t worry, I don’t think there’s too much you have to retain from the recent appreciation in crypto-assets. Really you just need to know two things:
- When bitcoin’s price rises, it drives media interest, and mass-market attention. Bitcoin’s highest trading volumes come when it appreciates, along with spikes in search engine interest and the like. Thus, bitcoin appreciating is good for companies who work in the cryptocurrency space. Firms like Coinbase, for example, who provide a consumer-friendly onramp into the world of crypto and make money on the buying and selling of cryptocurrencies.
- Bitcoin’s dominance among cryptocurrencies is growing once again. In the earlier days of the blockchain boom, bitcoin’s value was over 80 percent of the value of all crypto assets. That fell into the 30s in early 2018. Today the percentage is back to 65. This means that smaller coins are struggling once again and that the link between the value of bitcoin, and other similar products, could be loosening.
And with that, you can go back to not caring about bitcoin.
WeWork, And Who Else?
Now that the third quarter is underway, the public markets are gearing up for earnings season. For us covering the private markets, it’s usually a period of watching and not participating much. But in recent quarters, some private companies have taken on the mantle of public shops, at least when it comes to regular disbursements of financial data relating to their recent performance.
Uber started doing this ages ago, and Lyft took part in the game as well before going public. WeWork also reports some performance. What do these companies have in common? They were (are, in the case of WeWork) some of the most valuable startups ever put together.
It seems that private companies worth $10 billion or more are disclosing information normally kept under wraps while they await going public. You can imagine why this is becoming more common. By sharing the information they want, decacorns can control their public narrative by disclosing their best figures. And, what better way to combat leaks than to disclose the information yourself in the manner of your choosing?
Also, regular reports of good performance could diminish calls for short-term liquidity from existing shareholders. A good report must renew faith among the shareholding. Of course, there are the normal risks that come from such disclosures, including providing asymmetrical information to yet-private competitors, and the chance that your results aren’t as good as you think, leading to ridicule.
Regardless of the fears, companies are doing this, and I want to encourage it. Which brings us to our final point of the morning. Namely, which company is next? I suspect we’ll see fresh Q2 numbers from WeWork in the next few weeks (here’s our take on its Q1 figures), but what company is the next to begin releasing earnings before going public? Airbnb?
Whichever firm it is, please know that I love email.
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