Here's Whether You Should Buy Postmates Stock at the IPO

Postmates may have transformed retail delivery, but that doesn't mean you should buy Postmates stock once it goes public. Today, we'll break down whether Postmates stock will be worth your investing dollars.

We'll even show you how emerging firms like Postmates are benefitting another industry. And it's a trend that could make you a lot of money too.

But if you're interested in the Postmates IPO, you'll want to know every detail of the company before putting your hard-earned money behind it.

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When Postmates first launched, it upset the traditional delivery industry by enabling local small businesses to deliver their products to local customers. This was a big deal since it directly challenged companies like Inc. (NASDAQ: AMZN) in a niche way.

Now, Postmates has become one of the most popular delivery apps, with a huge valuation of $2.4 billion. And with many investors anticipating its IPO, its valuation could grow even more once the firm goes public.

Let's take a look at what exactly Postmates is, how it got its $2.4 billion valuation, and whether it's worth a buy at its IPO date.

Why the Postmates IPO Is Getting So Much Hype

Founded in 2011, Postmates is a San Francisco--based on-demand delivery company. But it's not just any kind of delivery service - it started the United States' movement for deliveries from small businesses.

Postmates employs on-demand couriers to pick up and deliver products from a variety of businesses like restaurants, convenience stores, retail stores, and more.

Through Postmates' online app, folks can have everything from gift cards, shoes, food, and even tech products delivered to their doorstep from local stores. If a business is a partner with

Postmates, folks will pay a delivery fee between $0.99 and $3.99. But for any other merchants, you'll pay anywhere from $5.99 to $9.99 per delivery.

Depending on the price and time of your delivery, there is also a variable percentage-based service fee based on the price of your purchases as well as a "Blitz" fee. Blitz fees only occur if you make your order during peak order times, when you need deliveries quickly.

However, if you're a Postmates Unlimited member, you don't have to pay delivery or Blitz fees.

And since its launch, Postmates' delivery service has become incredibly popular. It makes over 5 million deliveries per month. It's also expanded to 3,500 cities across all 50 U.S. states. Postmates also reported that it now works with 500,000 restaurants as well as major companies like Apple Inc. (NASDAQ: AAPL) and Walmart Inc. (NYSE: WMT).

That's translated into a huge boost in revenue. Postmates' revenue was $400 million in 2018, up 60% from 2017's $250 million.

That kind of growth has investors excited.

The on-demand delivery firm has raised a little over $681 million from companies like Blackrock Inc. (NYSE: BLK), Spark Capital, Tiger Global, Harmony Partners, Founders Fund, and GPI Capital.

Celebrities have also taken an interest in Postmates. Professional basketball player Kevin Durant put a little under $1 million into Postmates. He even went as far as riding around on a bike for a day hand-delivering shoes to folks that ordered them through the app.

These investments helped propel Postmates' valuation to $2.4 billion. Once the firm goes public, it could soar even higher.

But the firm's revenue growth and valuation have some investors overlooking some major flaws.

In 2017, Postmates posted a loss of $75 million. After that, the firm only released its revenue in its 2018 financials. Now, Postmates has delayed its IPO indefinitely after several other big public offerings from unprofitable firms like WeWork completely fell through.

This suggests the company is still not close to profitability, especially because CEO Bastian Lehmann cited market choppiness as a big reason for the delay.

Postmates is also competing in a highly saturated market against companies like DoorDash and UberEats. Doordash alone is worth almost $13 billion, while Uber Technologies Inc. (NYSE: UBER) has a $46 billion market cap.

Even though these two aren't profitable either, it still has to go against the $886 billion juggernaut that is Amazon. Amazon offers everything from free same-day deliveries on some of its products to grocery deliveries from Whole Foods.

Between Postmates' 2017 losses, its delayed IPO, lack of financial information, and the series of poor IPOs we've seen recently, it's hard to get excited about Postmates stock right now.

That could also change depending on the Postmates' IPO price once it gets closer to an IPO date. There's certainly a chance it could offer enough value that it would be worth a speculative investment.

In the meantime, we have an even better investment that could help you safely capitalize on unicorn companies like Postmates that rely on information technology.

This Stock Could Be a Great Way to Play the Tech IPO Market

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SAP SE (NYSE: SAP) is a multinational software company that provides software solutions to other companies. It's essential to the tech startup space, plus it's a safe stock that has already proven to be profitable.

SAP serves industries like financial services, retail, automotive, media, healthcare, commodities, and more.

What makes SAP such a great investment is the fact that it's been providing software to over 425,000 startups and big corporations for 47 years. It was also one of the earliest pioneers for Information Technology software.

But SAP remains on the cutting edge of tech.

In fact, SAP is developing IoT analytics technology with Verizon Communications Inc. (NYSE: VZ) that will take advantage of 5G networks. It's also partnered with Microsoft Corp. (NASDAQ: MSFT) to improve cloud networks.

Since it has a long history with technology, SAP does everything from cloud services, accounting software, network management, data analytics, enterprise software, and plenty more.

These are essential for startup companies that need software and data management but don't want to spend money developing them in-house. It's no wonder some of its top customers include Airbnb, BMW, Coca-Cola, Ford, eBay, IBM, and Samsung.

Postmates even uses SAP's "Vehicles Network" to manage its delivery service.

As more and more firms like Postmates and Airbnb emerge, disrupting entire industries with data-savvy operations, SAP will be even more crucial. That makes it an excellent company to invest in right now.

And SAP has the experience and long-term profitability we like to see from software firms. In fact, it's turned a profit for 20 years straight.

SAP's revenue so far in 2019 is already $21.9 billion with a net income of $11.16 billion. Analysts also forecast its revenue will increase 49% to $32.69 billion by 2020.

Right now, SAP's earnings per share (EPS) estimate is $4.14. Nasdaq reports that between now and December 2021, it'll grow 31.15% to $5.43 per share.

This means analysts expect the firm to continue growing its profits. And it's no surprise considering its track record over the last 47 years.

SAP is currently trading for $135.72 per share. But analyst estimates suggest it'll gain a solid 23.06% over the next 12 months. Plus, it rewards its investors with a 1.23% dividend yield.

Now, if you're interested in IPOs due to their upside potential, you might not be as intrigued by SAP's sturdy growth potential.

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