Direct Listings And Delivery Offerings: More On The 2019 IPO Landscape

Morning Markets: A quick IPO update as the year comes to a close.

The 2019 IPO cohort could be even more interesting than I anticipated. When we last took a peek, we focused on decacorns. The biggest expected offerings, in other words. Since then there’s been lots more news to go over, so let’s unpack what else might happen next year.

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Slack

Slack, the popular enterprise chat application, is closer to going public than previously thought. The software as a service (SaaS) company has hired Goldman to “lead its [IPO] next year as underwriter,” according to Reuters.

The addition of Slack to the 2019 IPO group probably adds another decacorn to the mix. Decacorns, mind, are quickly growing tech shops worth $10 billion or more. Slack’s last private valuation was more than $7.1 billion, but the company is reportedly seeking a valuation of more than $10 billion for its IPO.

Slack has raised a known total of $1.2 billion according to Crunchbase. Most recently, the company raised a $427 million Series H led by General Atlantic and Dragoneer Investment Group in August 2018.

Direct Listing

The Slack IPO made more noise this week for another reason than its mere existence. Recode reported that Slack is among companies that may pursue a direct listing instead of traditional IPOs. Slack would follow Spotify in doing so, and may be joined by Airbnb, according to the report.

Spotify first confidentially filed to go public in December 2017. Its choice to pursue a direct listing left some feeling slightly confused. We spoke to IPO expert Barrett Daniels of Nextstep Advisory Services in January 2018 to break it down. According to Daniels, growth (or lack thereof), revenue size, and industry climate are all factors that could affect the decision to list directly.

Direct listings have fans. How well Spotify’s direct listing went is up to interpretation. The firm is about a third under its 52-week highs, but fans of the financial decision on Twitter will still claim that the firm saved money through its choice.

Regardless of what we think, there could be one or two more direct listing coming up.

Postmates

And finally, Postmates has hired JPMorgan for a regular IPO next year. This is a surprise to some degree, but Postmates has raised $578 million, per Crunchbase, and was most recently valued at $1.2 billion, post-money.

The firm, if it went public, would be a repudiation of all the snark that delivery companies took around 2015, if we have our dates correct. There was a boom in funding for delivery companies of all sorts, some that made it (Postmates! DoorDash!) and some that didn’t (Rest in peace, SpoonRocket). That party eventually reached the hangover stage, and Postmates had to power through being out of fashion.

An IPO is, really, the ultimate business fuck you.

Add all that into the likely Pinterest, Uber, Lyft, and Airbnb offerings and 2019 is going to be a corker.

llustration Credit: Li-Anne Dias