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Cash In on Match.com IPO Now After PlentyOfFish Acquisition News
New stock alert: The Match.com IPO – from parent company IAC/InterActiveCorp. (Nasdaq: IACI) – is expected in 2015's fourth quarter.
IAC announced on June 25 that it plans to turn The Match Group, comprised of several dating sites including Match.com, into a public company. Barry Diller, who controls IAC, said it is "healthy" to give companies "independence from a mother church."
Still, IAC plans to issue less than 20% of its shares in the initial public offering. So, Match.com will remain majority-owned by its parent.
Over the last decade, The Match Group has been an aggressive acquirer of "socializing" websites. Under the company's expanding umbrella are dating sites such as OkCupid, OurTime, and Tinder. In the last year, it added fitness website DailyBurn and The Princeton Review, the test preparation and college admission services company.
Just this week, The Match Group announced it would buy dating site PlentyOfFish for $575 million in cash. It's Match's largest deal ever. PlentyOfFish claims to have more than 3 million active daily users. It's free for users but offers premium services.
The Match Group's online dating businesses, with 3.4 million subscribers, posted $240.9 million in operating profit for 2014, a 6% year-over-year revenue rise, according to a U.S. Securities and Exchange Commission filing. In Q1 2015, The Match Group recorded revenue of $239.2 million, roughly 30% of IAC's $772 million revenue.
"The Match Group is poised for substantial growth in the coming years," Gregory R. Blatt, who will remain the company's chairman, said in a news release. "The dating industry has come a long way since its inception, but the category remains underpenetrated."
Profiting Now from the Match.com IPO
Money Morning Capital Wave Strategist Shah Gilani predicted on June 12 that IAC would do a Match.com IPO. That was about two weeks before the official announcement.
At the time, Gilani recommended shareholders of IAC hang on to the stock to get the then anticipated Match.com spin-off shares. He also said to pick up more should IAC shares slip.
"Whether you bought IAC shares or not, I recommend buying more shares (or opening a new position) if IAC dips to $77," Gilani said.
He's not expecting IAC shares to fall sharply for any reason other than overall market sentiment. Indeed, shares spiked 5.1% to $81.19 on news of the Match.com IPO. But increasing uncertainty plaguing U.S. and global markets could cause all stocks to take a hit.
Read Gilani's full Match.com IPO profit play analysis here.
The Three IPO Investing Rules to Follow for Any New Stock
IPO investing can seem like an exciting way to reap huge profits. But the truth is, all of the excitement can blind investors from the losses that loom down the road.
Take the Etsy Inc. (Nasdaq: ETSY) IPO, for example. The online marketplace went public on April 16, pricing at the high end of its $14 to $16 range and raising $267 million. It gained 87.5% in its first day and was one of the most successful tech IPOs of the year.
Since then, ETSY stock has plummeted 53.2%. It's currently the worst IPO of 2015.
As alluring as the deal was, it only benefited institutional investors willing to buy large quantities of ETSY stock before its debut. These Wall Street "VIPs" usually see immediate profits while retail investors are forced to purchase shares at an inflated price.
In other words, IPO investing is a recipe for hefty losses for traders like you and me.
"The IPO process is now a rigged game – one in which the founders, the early angel investors, venture capitalists, and the investment bankers all make out like bandits," explained Money Morning Chief Investment Strategist Keith Fitz-Gerald. "They don't give a rat's you-know-what about whether you make money."
Despite the unfair IPO investing process, there are still a few ways to profitably play a hot stock debut.
Here are the three best ways to score big gains from new IPOs…
The Three Best IPO Investing Rules to Follow
IPO Investing Rule No. 1: Hold off until the lock-up period is over.
It's always best to wait until the frenzy settles down and the IPO lock-up period has ended. The IPO lock-up period is the stretch of time after a company goes public in which insiders like founders and venture capitalists can't sell their shares of the stock. It can last anywhere from 90 to 180 days after the company hits the market.
Letting the dust settle gives you time to consider the stock's profitability and ensures you get the best return on your investment. You'll also avoid much of the early volatility new stocks experience.
Here are two more important IPO investing rules to follow…
IPO Investing Rule No. 2: Make the company prove it merits your money.
Before buying a new stock, you'll also want to wait for a few quarterly earnings reports to come out.
One reason Etsy has fallen so far from grace is the company's disastrous first-ever earnings report. It reported a net loss of $36.6 million in Q1, compared to a loss of $500,000 in Q1 2014. Shares responded by falling more than 19%. The numbers reflected how far away Etsy is from becoming profitable.
You never want to invest in a company that isn't profitable. The only way to figure that out is to wait for the firm to release its financials.
"IPO hype is based on what 'could be,' not what 'is,'" Fitz-Gerald said. "Many times management cannot make the jump, and you do not want to pay the price for finding out which is which."
IPO Investing Rule No. 3: Use lowball orders.
A lowball order is an order that's significantly below the fair value of a stock. It is commonly used to gauge the seller's expectations for the value of the asset.
Lowball orders are perfect for new stocks because they give you the power to name the price. It's always safer and more profitable to set the price you want and have the market come to you.
They also prevent you from chasing a risky trade, which can be tempting when a hot IPO hits the market.
"Temptation is the most powerful of all emotions, which is why Wall Street hypes IPOs the way they do," said Fitz-Gerald.
Fitbit (NYSE: FIT) IPO Date Is Approaching – Here's a Breakdown of the Deal
The Fitbit (NYSE: FIT) IPO date is set for Thursday, June 18.
The deal is one of the most anticipated tech deals of 2015. Fitbit will be the first standalone wearable tech company to go public. That's significant considering wearable tech is an exploding market. It's projected to be worth $19 billion by 2018.
With the Fitbit (NYSE: FIT) IPO date just three days away, here's everything you need to know about the deal – including whether or not you should buy Fitbit stock when it begins trading…
Fitbit (NYSE: FIT) IPO Date Is This Week! Here Are Your Biggest Questions Answered
What is the Fitbit IPO price?
Fitbit Inc. (NYSE: FIT) set a price range of $14 to $16 a share for its IPO. The company will announce a final IPO price the evening of Wednesday, June 17.
How much money will the Fitbit IPO raise?
Fitbit will sell 29.85 million shares. At the midpoint of the price range, the Fitbit IPO will raise $448 million.
How much is Fitbit worth?
After the IPO, Fitbit will be valued at $3.7 billion. It will be tied with Black Knight Financial Services Inc. (NYSE: BKFS) as the most valuable tech IPO of the year, followed by Inovalon Holdings Inc. (Nasdaq: INOV) at $3.4 billion and GoDaddy Inc. (NYSE: GDDY) at $3 billion.
What kind of company is Fitbit?
Founded in San Francisco in 2007, Fitbit is a consumer electronics company known for its wearable devices of the same name. According to its website, Fitbit's mission is to make products that "fit seamlessly into your life so you can achieve your health and fitness goals, whatever they may be."
Fitbits are wireless activity trackers that measure health metrics like calories burned, quality of sleep, and number of steps walked. There are six different models – Zip, One, Flex, Charge, Charge HR, and Surge.
The products caused controversy last year when Fitbit did an involuntary recall of the Fitbit Force. The recall came after roughly 9,900 customers who purchased the Force experienced skin irritation and rashes. The Consumer Product Safety Commission said it was caused by "allergic contact dermatitis." The Fitbit Force has since been made unavailable to buy on the company website.
Fitbit has enjoyed enormous sales growth over the last five years. Sales skyrocketed from $14.5 million in 2011 to $745.2 million in 2014. Over the same period, Fitbit went from a loss of $4.3 million to a profit of $131.8 million.
Last quarter, its devices constituted 85% of U.S. wearable fitness devices and revenue grew 209% to $337 million. According to market research company The NPD Group, Fitbit has sold 20.8 million devices as of March 31.
Who are the underwriters of the Fitbit IPO?
Does Fitbit have any competition?
Fitbit admitted in its IPO filing that it faces stiff competition from both electronics and traditional fitness companies.
"We expect competition in our market to intensify in the future as new and existing competitors introduce new or enhanced products and services that are potentially more competitive than our products and services," the filing stated.
Fitbit's most dominant competitor is Apple Inc. (Nasdaq: AAPL) and its Apple Watch, which has health and fitness tracking capabilities. According to a survey by Fortune, Apple Watch sales estimates in 2015 range from 8 million to 41 million, with an average of 22.6 million. That average beats Fitbit's total sales of 20.8 million by 8.7%.
Apparel companies like Nike Inc. (NYSE: NKE) and Under Armour Inc. (NYSE: UA) also pose a threat. These firms are starting to produce tech-supportive apparel – or "smart clothing." Smart clothing sales are supposed to hit more than 10 million units this year and 26 million in 2016.
As wearable tech grows into a $19 billion industry, there may be enough room for both Fitbit and its competitors. But since wearable tech is still in its infancy, there's no telling who will survive.
But does that mean you should buy into the FitBit IPO?
Should I buy into the Fitbit IPO?
With its strong profitability and trendy products, Fitbit stock could be a healthy investment down the road.
But we strongly recommend waiting until after the Fitbit IPO to consider investing in FIT stock. That's because IPOs aren't a good idea for retail investors.
You see, Wall Street usually reserves popular IPOs for institutional investors willing to buy huge quantities of the stock. These "VIPs" usually cause the stock to sell off by the time we could buy into it.
Not to mention most of these IPOs are accompanied by hype that overshadows the facts.
"Too many investors hear of a 'hot IPO' and try to get in on the action without doing any homework at all," Money Morning Defense & Tech Specialist Michael A. Robinson explained. "That's a recipe for a hefty loss."
Best and Worst IPOs of 2015 – and What’s Next on the IPO Calendar
It's nearly the midpoint of the year, so it's time to look at the best and worst IPOs of 2015, and what's scheduled on the IPO calendar for the rest of the year…
Let's get right to the winner and loser…
SHAK is the best-performing new stock of 2015 to date and has gained 66.9% since its Jan. 30 debut. Meanwhile, ETSY is the worst-performing IPO of the year, having fallen 46.7% in the two months it's been on the market.
That's among a less impressive group of new stocks than we had last year. This year's IPO calendar so far has been lackluster compared to last year's record-breaking performance.
There were 273 IPOs in 2014. Last year's IPO market was the most active since 406 companies went public in 2000 at the height of the dot-com bubble. It was also the second year in a row in which there was at least one IPO each week.
But 2015 has been dramatically slower as companies remain wary of volatile currency markets and global interest rate movements.
Now that we're nearly halfway through the year, here's a look at the best and worst IPOs of 2015, and what's ahead on the IPO calendar this year…
The Best and Worst IPOs of 2015: Q1
The first quarter of 2015 saw 34 IPOs raise $5.4 billion. According to Renaissance Capital, a manager of IPO-focused ETFs, that makes it the least active quarter by IPO count since Q1 2013. It was the smallest by funds raised since Q3 2011.
Healthcare companies made up 47% of all IPOs in the first quarter, with 16 deals. That total was still lower than in any quarter last year.
The decline wasn't limited to health care. It occurred across every sector, particularly energy and technology. The energy sector saw only two companies go public. There were only four tech IPOs in Q1 – down from 14 during the year-ago quarter.
However, the lagging energy and tech sectors provided the two largest IPOs of the quarter. Natural gas company Columbia Pipeline Partners LP (NYSE: CPPL) raised $1.1 billion in its February debut. Cloud analytics firm Inovalon Holdings Inc. (Nasdaq: INOV) raised $600 million and is up 11.9% from its IPO price.
The number of profitable companies going public also fell significantly in Q1…
Only 10 of the 37 companies that hit the market last quarter were profitable. That's a 43% decrease from the first quarter of 2013. GoDaddy Inc. (NYSE: GDDY) was the fourth largest IPO of the first quarter despite not having turned a profit in its 18-year history.
Companies holding IPOs have lower revenue growth too. According to Fortune, most companies that went public in 2013 boasted sales growth of 50% over the previous year. This year, it's about half of that.
"The IPO used to be a moment of glory," Fortune reported. "Now it's a sign of desperation."
And that desperate trend continued into the second quarter – take a look…
The Best and Worst IPOs of 2015: Q2
The IPO market in the second quarter has been more active than the first quarter.
There have been 39 IPOs so far this quarter. That's five more than the first quarter, and there are still more than two weeks left. May was the busiest month of the year with 20 IPOs.
Healthcare led the way again in Q2 with 16 IPOs. Six more healthcare IPOs are expected to price before the end of the quarter.
Energy and tech had five and six IPOs, respectively.
Tallgrass Energy GP LP's (NYSE: TEGP) $1.2 billion deal surpassed Columbia Pipeline Partners as the largest U.S. IPO of 2015. Online marketplace Etsy Inc. (Nasdaq: ETSY) was the most explosive tech deal of the quarter, soaring 88% on the first day and raising $267 million.
Although the Etsy IPO was met with enthusiasm, it's another example of a company whose valuation overshadows its lack of profitability. The company even admitted in its IPO filing that it "may not achieve or maintain profitability in the future." That hard truth has deflated the Etsy stock price by nearly 50%.
Shopify Inc. (NYSE: SHOP) is in a similar situation. The Canadian e-commerce company rushed to market last month despite having lost nearly $35 million over the last decade. Like Etsy, Shopify told investors not to expect profits anytime soon.
After seeing the best and worst IPOs of 2015, investors are looking ahead to the second half of the year. Here's what they can expect…
How Does the Second Half of the 2015 IPO Calendar Look?
The last two quarters on the 2015 IPO calendar look promising as the energy and tech sectors keep growing.
The Tallgrass Energy and Columbia Pipeline IPOs prove investors are pouring money into big energy companies right now. Energy IPOs have raised $3.9 billion in proceeds – more than any other sector this year.
The sector's strong performance shows the market is still receptive to energy deals despite low oil and natural gas prices. In fact, more companies will want to go public as oil prices rebound throughout the year due to increased profitability during high price periods.
Then there's tech…
According to The Wall Street Journal, there are 98 startups valued at $1 billion or more by venture capital firms. Many of them, including Xiaomi and Uber, have gone through several rounds of funding and are expected to hit the market later this year.
Unlike Etsy and Shopify, these startups aren't prematurely rushing into an IPO. They are instead waiting until they've developed long-term growth strategies before becoming public companies.
The Fitbit IPO Leads 11 Upcoming IPOs This Week (NYSE: FIT)
There are 11 upcoming IPOs this week expected to raise a combined $1.63 billion.
The largest and most anticipated deal this week is the Fitbit IPO. Fitbit will be the first consumer electronics IPO since GoPro Inc. (Nasdaq: GPRO), which soared 31% on its first day and is up 139% from the offer price.
According to Renaissance Capital, a manager of IPO-focused ETFs, the Fitbit IPO is one of three companies this week to have a market cap over $1 billion. There have only been 13 companies that large to go public this year.
Here's a look at the Fitbit IPO and the rest of this week's upcoming IPO calendar…
The Fitbit IPO and 10 More Upcoming IPOs
Fitbit Inc. (NYSE: FIT) is a consumer electronics company known for its wearable fitness devices of the same name. Fitbits are wireless-enabled activity trackers that measure health metrics like calories burned, quality of sleep, and number of steps walked.
Fitbit has dominated the multi-billion dollar wearable tech industry. In the first quarter, its devices constituted 85% of U.S. wearable fitness devices and revenue grew 209% to $337 million. The wearable tech market is projected to be worth $19 billion by 2018, suggesting there may be enough room for both Fitbit and the closely competing Apple Watch.
The Fitbit IPO will raise $448 million. The company will sell 29.85 million shares at a $14 to $16 price range. The tech firm is valued at $3.7 billion and will begin trading on Thursday, June 18.
Univar Inc. (NYSE: UNVR) is a leading chemicals distributor based in Illinois. It's the largest chemical distribution firm in North America and second largest in Europe. Univar underwent a leveraged buyout — an acquisition of another company using bonds or loans — by CVC Capital Partners in 2007 and Clayton Dubilier & Rice in 2010. The company posted $10.2 billion in sales between March 2014 and March 2015. Univar is set for a $420 million deal by offering 20 million shares at a price range of $20 to $22. It has a market valuation of $2.9 billion and will hit the market on Thursday, June 18.
8point3 Energy Partners LP (Nasdaq: CAFD) is a yieldco that primarily owns solar energy projects and utilities in California. The San Jose, Calif.-based company was formed this year by solar cell manufacturers First Solar Inc. (Nasdaq: FSLR) and SunPower Corp. (Nasdaq: SPWR). It plans to offer an initial yield of 4.3%. The yieldco hopes to raise $400 million by selling 20 million shares at a $20 to $22 price range. CAFD sits on a $1.4 billion valuation and will debut on Friday, June 19.
MINDBODY Inc. (Nasdaq: MB) offers back-end management software for more than 40,000 fitness and wellness companies. Despite posting $77 million in sales from Q1 2014 to Q1 2015, MINDBODY should be unprofitable in the near term as it heavily invests in sales and marketing. Shopify Inc. (NYSE: SHOP) was the last software-as-a-service (SaaS) IPO and currently trades 81% above its offer price. MB plans on raising $100 million by offering 7.15 million shares at a price range of $13 to $15. It's valued at $568 million and will begin trading on Friday, June 19.
Celyad SA (Nasdaq: CYAD) plans to raise $99 million by selling 1.4 million shares at $70.98 per share. The Belgian biotech will hit the market sometime this week.
Fogo de Chão Inc. (Nasdaq: FOGO) is set for a $75 million deal and will offer 4.41 million shares at a $16 to $18 price range. The Brazilian steakhouse chain will start trading on Friday, June 19.
Cynapsus Therapeutics Inc. (Nasdaq: CYNA) will generate $64 million by offering 4.5 million shares at $14.18 a share. The Parkinson's-focused biotech firm will debut sometime this week.
Nivalis Therapeutics Inc. (Nasdaq: NVLS) hopes to raise $60 million by selling 4.29 million shares at a price range of $13 to $15. The cystic fibrosis treatment company will hit the market on Wednesday, June 17.
Principal Solar Inc. (Nasdaq: PSWW) will raise $25 million by offering 2.5 million shares for $9 to $11 each. The energy roll-up was delayed from last week and should begin trading on Tuesday, June 16.
Ritter Pharmaceuticals Inc. (Nasdaq: RTTR) is set for a $20 million deal by selling 1.82 million shares at a $10 to $12 price range. The oral therapy firm will go public on Friday, June 19.
Yulong Eco-Materials Ltd. (Nasdaq: YECO) hopes to raise $15 million by offering 2.25 million shares at a price range of $6.25 to $7.25. The Chinese brick producer was delayed from March and will debut sometime this week.
This Startup Valuation Chart Shows the World's Most Valuable Startups
The top 15 startups in the world have raised a combined $16.16 billion dollars to date and are valued at a combined $222 billion.
This startup valuation chart shows the highest-valued startups in the world as of May 2015:
The startup valuation chart is great for investors looking for the next hottest IPOs. After several rounds of funding, startup companies will typically take their firms public.
Here's a closer look at the top five companies on the highest-valued startup list…
Behind These Billion-Dollar Startup Valuations
Xiaomi Inc. is currently the highest-valued startup in the world at $46 billion. Xiaomi's most recent round of funding came in December 2014. All told, the company has raised roughly $1.4 billion in equity funding.
Xiaomi was founded in 2010 and is the largest smartphone vendor in China. It is currently the third-largest in the world. It's also one of the most highly anticipated IPOs in 2015.
But Xiaomi's reign as the top startup may be short lived. Reports last week indicated that Uber Inc. is in discussions to raise an additional $1.5 billion to $2 billion at a $50 billion valuation.
Uber has grown at a tremendous rate. In May 2014, the San Francisco-based company was valued at $18 billion. Its value topped $40 billion by December 2014.
Tied for third at $15 billion are Palantir and Snapchat. Palantir is a software company that works mostly with federal agencies and counterterrorism analysts. Snapchat is a mobile messaging service that allows users to send pictures and messages that disappear after opening. Neither company has mentioned an upcoming IPO, but with their valuations soaring rumors say they could plan for an IPO in late 2015 or sometime in 2016.
SpaceX, Elon's Musk's private aerospace manufacturer and space transport company, rounds out the top five with a valuation of $12 billion. The company has booked nearly 50 launches through 2017, including commercial satellite launches as well as NASA missions. These are expected to bring in roughly $5 billion in sales.
— Kyle Anderson (@KyleAndersonMM) May 20, 2015
Will There Be a Pinterest IPO in 2015?
The Pinterest IPO is one of the most talked-about tech deals of 2015 – despite no official confirmation the Pinterest IPO date will happen this year.
Pinterest is a scrapbooking site allowing users to manage topical or themed "pins" through collections called "pinboards." The site mostly emphasizes fashion, cooking, and child-related activities. According to comScore, about 68.2% of Pinterest's 1.36 million daily users are women.
It could become the last social media company to go public behind Facebook Inc. (Nasdaq: FB) and Twitter Inc. (NYSE: TWTR). Both have been successful on the stock market, respectively gaining 107.4% and 45.7% since their IPOs.
But Pinterest has made no plans to go public yet. In fact, CEO Ben Silbermann has repeatedly mentioned how the company isn't concerned about rushing into it.
"We haven't been focused on it right now, because I think it's pretty early for us," Silbermann told The Wall Street Journal last year. "And I wouldn't say it's the end goal for the company."
But there are signs that a Pinterest IPO date could be here sooner than originally planned…
Pinterest was valued at $1.5 billion in 2012. The Pinterest valuation had jumped to $2.5 billion by May 2013. By April 2014, the company hit around $4 billion.
Now, one year later, it commands a market valuation of $11 billion. That's 31% more than Spotify's valuation and nearly twice as much as Square's valuation. Pinterest is one of the few tech startups to hit a $1 billion valuation in less than five years.
The strong valuation growth is attributed to its equally strong funding growth. Pinterest has completed seven rounds of funding since its $500,000 angel investment in 2010.
According to CrunchBase, a startup database run by IT news site TechCrunch, the company raised $10 million in Series A funding in 2011. Pinterest raised $100 million only one year after that in its Series C round. Pinterest completed its Series G funding in March, raising $367 million and bringing its total funding to $1.1 billion. Pinterest's funding has seen an average growth rate of 104.2% each round.
Other startups with similar valuations aren't even close to that level of funding growth.
In its first five rounds, Pinterest raised $562 million. That's 3.9% more than Flipkart over the same funding period. Pinterest's $562 million beats Spotify's total funding so far, which is $534.8 million.
Despite more than enough funding raised, there's this one big reason why the Pinterest IPO is taking its time…
The Pinterest IPO Has a Valuation Bubble
Pinterest is just one of many private tech startups dealing with a bubble-worthy valuation. That means many of them command valuations they can never realistically live up to.
"I definitely think there's a valuation inflation going on in the market," noted Hany Nada, founder of venture capital firm GGV Capital, on CNBC's "Squawk Alley." "The average valuation is probably two times higher than it should be."
The best example of an overvalued "unicorn" – Silicon Valley's term for startups worth at least $1 billion – is Uber.
As of April, the private taxi app is the second-highest-valued private tech firm behind Chinese smartphone distributer Xiaomi. It is valued at $41 billion and has received $2.8 billion over 10 rounds of funding.
But $41 billion is an absurd amount of money when you consider the company's problems. The service is banned in many countries and has received criticism regarding user privacy and safety issues.
Despite no controversy, Pinterest is even more at risk due to its small revenue stream. The company went five years without a revenue or monetization strategy. It just started making advertising money last year with the "Promoted Pins" program, which lets users boost the reach of their pins.
"The nose-bleed valuations have put startups like Snapchat, Pinterest, and Airbnb in a pickle," said Sam Hamadeh, founder of research firm Privco, to MarketWatch. "[They] must continue to put off their IPOs, while they try to 'grow into the valuation' and pray they can IPO in the near future at a nice return to investors."
Why a Xiaomi IPO Will Hit the Stock Market Like a Tsunami
We don't know exactly when the Xiaomi IPO date will be, but one thing is crystal clear.
When the Chinese smartphone maker does go public, Wall Street will gobble up shares of Xiaomi stock.
The ambitious company – just five years old – has already become the top-selling smartphone vendor in its home country. Last year Xiaomi Corp. moved into third place in the global smartphone market.
For one thing, it currently has the highest valuation – $46 billion – of any startup, according to The Wall Street Journal. Uber has the second-highest valuation at $41.2 billion.
Russian billionaire Yuri Milner, who invested in Facebook Inc. (Nasdaq: FB) back in 2009, thinks Xiaomi's valuation could hit $100 billion. Milner's DST Global has been investing in Xiaomi since 2012.
"I was attracted by the size of the opportunity ahead of them," Milner told Bloomberg in December. "I don't think there's any company that has reached $1 billion in revenue as fast as Xiaomi. In every conceivable benchmark, it's almost unprecedented in terms of its speed of growth."
It's also very likely that a Xiaomi IPO will take place in the United States, either on the New York Stock Exchange or the Nasdaq.
Chinese tech companies generally prefer the U.S. market to Hong Kong because U.S. investors favor tech stock more so than Chinese investors. Chinese companies are also fond of multiple share classes, like Google Inc. (Nasdaq: GOOG, GOOGL), which the Hong Kong exchange does not yet allow.
The probable Xiaomi stock symbol is "MI," as the company uses the "Mi" moniker extensively in its branding.
Meanwhile, almost everything the company has done has served to whet an investor's appetite for the eventual Xiaomi IPO – take a look…
Why Investors Can't Wait for the Xiaomi IPO
Exhibit A for why investors are eager to see a Xiaomi IPO is the explosive growth of its smartphone sales. From just 7.19 million in 2012, Xiaomi grew its phone business to 61 million units last year.
That's an eight-fold increase in sales in two years in a well-established market with plenty of strong competition, including the likes of market leaders Apple Inc. (Nasdaq: AAPL) and Samsung Electronics Ltd. (OTCMKTS: SSNLF).
And that's almost entirely from sales in China. Over the next year or so, Xiaomi plans to expand into other Asian markets as well as Brazil and India.
The Indian smartphone market in particular holds tremendous potential for Xiaomi. India is the world's third-largest – but fastest-growing – smartphone market now.
Xiaomi has made deals with several electronics retailers in India to enhance its presence there.
The company hopes that the approach that brought it success in China will carry over to India and other new markets.
One thing that has set Xiaomi apart is its philosophy of "being friends with our fans." Xiaomi puts a great deal of effort into communicating with its customers on social media. It will often promote flash sales on social media to offer loyal customers deep discounts.
During one such sale in February, the company sold 2 million phones in 12 hours.
What's more, Xiaomi phones mimic Apple's elegant designs at less than half the price. Its high-end Mi Note, with a 5.7-inch screen, starts at just $370. Both Samsung's Galaxy S6 and Apple's iPhone 6 start at $850.
Another edge Xiaomi has is its customized version of the Android operating system, MIUI. That lets Xiaomi provide its own apps and services while allowing users access to the larger universe of Android apps.
But what makes this company so appealing is that it has ambitions far beyond simply selling smartphones.
"We Are an Internet Company"
You see, for all its success in selling smartphones, Xiaomi's bargain prices have kept profits low.
In a filing last year the company revealed that it had made just $56 million in profit on $4.3 billion in revenue for an operating margin of just 1.8%.
But that fits Xiaomi's larger strategy, which is to create a large customer base to which they will sell other software and services.
"We are an Internet company," Xiaomi cofounder Lin Bin said at a media event the company held in San Francisco in February. "We are not a handset company."
While its main business is phones, Xiaomi has already started branching out into other products, including tablets, a 3D TV, a fitness band, a "smart" air purifier, action cameras, a "smart" light bulb, a "smart" bathroom scale that beams your weight to your phone, and a power strip.
Note all the "smart" devices that reveal Xiaomi's master plan – to take over the connected home. The company already has the phone app to control them. And in January it unveiled a cheap ($3.60) "smart home" module that can attach easily to other home appliances.
That's a market with tons of profit potential.
"Xiaomi is expanding into the smart home and following the lead of Apple, Samsung, and others," Neil Mawston, executive director of researcher Strategy Analytics, told Bloomberg. "We expect Xiaomi to build an ecosystem of Mi devices and apps for the home, office, and car."
Uber IPO Update: What a $50 Billion Valuation Means for Uber
The ride-hailing startup Uber is in a round of funding that could value the company at an astonishing $50 billion, according to a new report from The Wall Street Journal.
According to the report, Uber is looking to raise between $1.5 billion and $2 billion in this round of funding. That will likely allow Uber to forego an IPO through the rest of 2015.
A $50 billion valuation would make Uber the highest-valued startup ever. Facebook Inc. (Nasdaq: FB) is the only venture-backed startup to reach a $50 billion valuation before an IPO.
The massive valuation sets up the Uber IPO to be the most hyped public offering since the Alibaba Group Holding Ltd. (NYSE: BABA) deal of September 2014.
Uber has grown at a tremendous rate. In May 2014, the San Francisco-based company was valued at $18 billion. Its value topped $40 billion by December 2014.
The Journal has also reported that Uber's 2014 revenue was roughly $400 million. At that rate, Uber is now worth more than 125 times its trailing revenue. But the company expects revenue to soar to $2 billion this year.
If Uber comes to market with a $50 billion valuation, it will already be bigger than 406 companies in the S&P 500. Household names like Twitter Inc. (Nasdaq: TWTR), Yahoo Inc. (Nasdaq: YHOO), and CBS Corp. (NYSE: CBS) would all be smaller than Uber.
The second-highest valued startup now is Xiaomi Inc., a Chinese smartphone company. Xiaomi is worth $46 billion. After those two there's a big drop off. The third-largest startup is the software company Palantir Technologies Inc., valued at just $15 billion.
There's no question the Uber IPO will be one of the biggest financial stories when it does happen. But the company still has some major problems to sort out before it can host an initial public offering…
Here's the Biggest Threat to an Uber IPO
The biggest issue facing Uber is the growing list of cities and countries that have either banned Uber or suspended its services.
The taxi industries and legislators in various cities around the world have also taken exception to Uber's practices. In many countries, Uber does not meet the necessary licensing and safety requirements.
Within the last month, Uber has been banned in Geneva, Switzerland, and São Paulo, Brazil. The entire country of Portugal has banned Uber as well.
In each of those locations, Uber's services are said to be in violation of the local taxi regulations. And those are just the most recent bans on the ride-hailing service.
This map shows where Uber is banned through May 12.
On March 24, New Delhi, India, courts upheld a ruling banning all Uber operations. The operations were originally suspended in December after a passenger reported being raped by a driver.
In early December, Uber was banned in the Netherlands when a Dutch court ruled the company breaks local taxi laws.
"The law is out of date and that means the technological service we offer had not yet been invented," Uber spokesman Thomas van Oortmerssen told Reuters concerning the ruling in the Netherlands. "The law needs to be changed to make it possible and it is now up to the politicians to do that."
Similar sanctions have been placed on Uber in Thailand and Singapore. The cities of Madrid, Spain, Portland, Ore., and the state of Nevada have also banned the service.
Uber has been appealing these rulings around the world. Uber claims many of the laws regulating international taxi industries are outdated.
The laws may indeed be outdated, but the fact that the list of cities and countries banning Uber is growing, instead of shrinking is worrisome for investors. That is a major problem that needs to be solved before an Uber IPO.
Five Upcoming IPOs This Week (5/18): BKFS, PGND, BZUN, CHCT, and SHOP
There are five upcoming IPOs this week set to raise a combined $973 million.
Last week we had the year's largest IPO by market cap.
We also saw a massive biotech IPO last week. Galapagos NV (Nasdaq ADR: GLPG) raised $275 million, surpassing Juno Therapeutics Inc. (Nasdaq: JUNO) as the largest U.S. biotech deal in the last 15 years.
According to Renaissance Capital, a manager of IPO-focused ETFs, this could be the first week of 2015 that sees more than one tech IPO. There are two e-commerce companies set to hit the market – one from Canada and one from China.
Five Upcoming IPOs This Week
Black Knight Financial Services Inc. (NYSE: BKFS) offers automated solutions for mortgage data servicing. The company is a spin-off of Fidelity National Financial Inc. (NYSE: FNF), a leading provider of title insurance, technology, and transaction services to the real estate and mortgage industries. Black Knight's platform is used by all top 25 U.S. mortgage servicers, giving the company a dominant market position. It plans to raise $400 million by offering 17 million shares at a $22 to $25 price range. Black Knight commands a market valuation of $3.5 billion and will hit the market on Thursday, May 21.
Press Ganey Holdings Inc. (NYSE: PGND) is a provider of patient survey and advisory services to healthcare companies. Officially on file under the name PGA Holdings, Press Ganey works in the nearly $4 billion market for healthcare patient satisfaction. The firm is boosted by the Affordable Care Act, which offers incentives that make healthcare more focused on consumers. The company's revenue and earnings grew 15% and 37% respectively in the first three months of the year. PGND is set for a $205 million deal. It will sell 8.9 million shares at a price range of $22 to $24. It's valued at $1.5 billion and will begin trading on Thursday, May 21.
Here are three more upcoming IPOs this week…
Baozun Inc. (Nasdaq: BZUN) is a Chinese e-commerce and logistics company. Baozun offers a full range of services necessary to launching a successful brand. It operates in the $4 billion outsourced Chinese e-commerce solutions industry and commands a 20% market share. Its most notable customers include Nike Inc. (NYSE: NKE) and Microsoft Corp. (Nasdaq: MSFT). The company is backed by Alibaba Group Holding Ltd. (NYSE: BABA), another Chinese e-commerce firm that became the largest IPO of all time last fall. Baozun will raise $143 million by selling 11 million shares at a $12 to $14 price range. BZUN has a $704 million valuation and will debut on Thursday, May 21.
Community Healthcare Trust Inc. (NYSE: CHCT) is a newly formed real estate investment trust (REIT) focusing on non-urban healthcare properties. Its portfolio includes 35 clinics and surgery centers, among other properties. The Tennessee-based company boasts a strong initial yield of 7.5%. CHCT is set to raise $125 million by offering 6.25 million shares at a price range of $19 to $21. It has a valuation of $131 million and will hit the market on Thursday, May 21.
Shopify Inc. (NYSE: SHOP) is an e-commerce company providing a cloud-based platform for small businesses to create online stores. The company's growth has exploded recently, doubling its revenue in each of the last two years. Shopify is set for a $100 million deal by selling 7.7 million shares at a $12 to $14 price range.
The Five Biggest 2015 IPOs to Watch
This past year was the biggest for the IPO market since the dot-com era of 2000. And the market shows no signs of slowing down.
That's why we've pinpointed the five biggest 2015 IPOs for investors to watch.
According to Renaissance Capital, a manager of IPO-focused ETFs, there are currently 119 IPOs in the pipeline for 2015. Combined, those companies should raise roughly $23 billion.
That comes on the heels of a massive 2014 IPO market. Through the first week in December, 262 companies have raised $82.1 billion through initial public offerings. That's already 50% higher than last year's total, and there is still at least another $1 billion expected to come through five upcoming IPOs.
And the companies that went public in 2014 have been more successful, on average, than the IPOs of the previous 10 years. New stocks have averaged a 13.1% jump from their offer prices this year. Over the previous 10 years, new stocks gained 9.8% on average.
This year's new stocks have also outperformed the Dow Jones Industrial Average, up 6.9% in 2014.
The biggest winners of 2014 have been Radius Health Inc. (Nasdaq: RDUS), GoPro Inc. (Nasdaq: GPRO), and Atara Biotherapeutics Inc. (Nasdaq: ATRA). Those three stocks have gained 186%, 182%, and 177% from their offer prices, respectively.
But the biggest IPO story this year was Alibaba Group Holding Ltd. (NYSE: BABA). The Alibaba IPO was the largest initial public offering in history, raising $25 billion. On Sept. 18, BABA priced its shares at $68 each. Today, those shares are worth more than $106 – a 56% gain in less than three months.
2015 IPOs to Watch, No. 1: GoDaddy Inc.
GoDaddy Inc. is reportedly planning an IPO for early 2015, seeking a $4.5 billion valuation.
The company first filed for an initial public offering in June 2014 and set a placeholder value of $100 million on the deal. Placeholder prices are common among IPO filings; GoDaddy will likely raise much more than that through an IPO.
GoDaddy is a web-domain company with more than 12.2 million customers and 57 million domain names. Founded in 1997, it's best known for its marketing. Its ads feature scantily clad models and celebrities and are run during high-profile events like the Super Bowl.
Advertising has helped the company create strong brand awareness in the United States, and ensures the GoDaddy IPO will be one of the most talked about deals of 2015.
But GoDaddy stock is not on our "best investments of 2015" list…
Despite 17 years in the business, GoDaddy is not profitable. In fact, it reported a loss of $89 million in the first half of 2014.
But the biggest challenge for GoDaddy stock will be its competition. Google Inc. (Nasdaq: GOOGL) unveiled its "Google Domain" business last summer, and that will be a major problem for GoDaddy. As one of the biggest tech companies in the world, Google has far better resources and brand recognition.
Don't follow the crowd – right now, GoDaddy looks like an IPO to avoid in 2015.
Money Morning Members: Continue reading for four other IPOs to watch in 2015. For those new to Money Morning, sign up to keep reading – it's completely free…
2015 IPOs to Watch, No. 2: Uber Inc.
On Dec. 4, Uber Inc. Chief Executive Officer Travis Kalanick announced the company raised $1.2 billion in its most recent round of funding. Now, the ride-booking company is valued at $40 billion.
And there could be more money on the way. In his announcement, Kalanick left the door open for additional funding when he said there is "additional capacity remaining for strategic investments."
With a $40 billion valuation, Uber is the highest valued startup in the world by a whopping $30 billion. Uber had completed a previous round of funding in June that valued the company at $17 billion. Through six rounds of funding since 2009, the company has raised $2.8 billion.
Uber's major appeal to investors is that it's disrupting an untouched market. The taxi industry has operated for years with relatively few changes and competitors. With Uber, consumers have a viable third option between taking a taxi cab or paying exorbitant prices for a private car service.
According to TechCrunch, Uber brought in approximately $213 million in revenue in 2013. Moreover, revenue has been doubling every six months, which constitutes an annual growth rate of nearly 145%. The New York Times claims that Uber could potentially bring in $1 billion in annual revenue if it's able to capture a 50% market share of the U.S. taxi industry. We'll get a better idea of Uber's market share when the company files for an IPO.
Because of this recent round of funding, Uber can put off an IPO until late 2015. That's a good thing as it gives the company time to address a couple recent scandals it needs to deal with now if it wants to attract investors. One involved controversial quotes from a senior vice president while the other triggered privacy concerns.
2015 IPOs to Watch No. 3: Xiaomi Inc.
Its name may not resonate in the United States, but Xiaomi Inc. is the third-largest provider of smartphones in the world, trailing only Apple Inc. (Nasdaq: AAPL) and Samsung.
According to the South China Morning Post, Xiaomi is on pace to sell 60 million smartphones for the full-year 2014. In 2015, the company expects to sell 100 million devices.
However, the same report indicates that profits may be lackluster. The company sells many of its devices near their break-even point. The average device sold by Xiaomi retails at about $150. Apple's iPhones retail for as much as $600 each in the United States.
The company reportedly plans to hold an IPO in early 2015. While the size of the deal is unknown, the company is expected to be valued in the $50 billion range.
Few Americans know about Xiaomi, but a U.S. IPO would be a big story due to the recent performance of Chinese stocks.
In 2014, China's largest Internet search company, Baidu Inc. (Nasdaq ADR: BIDU), has gained 26%. The Chinese online automobile seller Bitauto Holding Ltd. (NYSE ADR: BITA) is up 122% in 2014. After holding the largest IPO in history, Alibaba is up 56% from its offer price.
A debut from Xiaomi stock in 2015 would be welcomed by investors looking to play the growing Chinese market. It's unclear whether Xiaomi will debut in the United States or China, but the recent success of Chinese companies in the U.S. could sway that decision.
2015 IPOs to Watch No. 4: Box Inc.
Box Inc. originally filed for an IPO on March 24, 2014. At the time, CEO Aaron Levie attached a price tag of $250 million on the deal. However, the company has delayed its offering several times this year due to market volatility. Now Box has an early 2015 debut target.
Box is a cloud-storage company with more than 25 million registered users and works with more than 34,000 companies, including Procter & Gamble Co. (NYSE: PG), Pandora Media Inc. (NYSE: P), and Nationwide Insurance.
The good news for Box is that its market is expanding. Earlier this year, Forrester Research estimated that the cloud computing industry will grow to $241 billion by 2020.
While the Box IPO will grab headlines in 2015, the company comes with too many questions to be considered a sound investment right now.
For one, Box is still unprofitable. When the company released financial information in March, Box noted that losses had widened in the last year from $112.6 million to $168.8 million. The company also admitted it doesn't expect to be profitable "for the foreseeable future" as it focuses on marketing and sales development.
The company also faces stiff competition. Rival Dropbox has also been contemplating an IPO throughout 2014, and offers a very similar service. Microsoft Corp. (Nasdaq: MSFT) has been upgrading its "OneDrive for Business" product to directly compete with Box and Dropbox. Amazon.com Inc. (Nasdaq: AMZN) has also entered the space with its Zocalo service.
2015 IPOs to Watch No. 5: Airbnb Inc.
Airbnb Inc. operates a website that allows users to rent different types of properties including apartments and houses. It's a disruptive technology, one that targets the hotel industry.
Through October 2013, the company had been used by over 9 million guests in its five years of existence. For the full-year 2013, the company reported 6 million new guests.The company was founded in 2008 and has already raised $800 million through seven rounds of funding. Airbnb is valued at $10 billion, making it one of the highest valued startups on the market today. At that price, Airbnb is in the same company as established hotel chains Wyndham Worldwide Corp. (NYSE: WYN) and Hyatt Hotels Corp. (NYSE: H), which are valued at $10.5 billion and $9.1 billion respectively.
Airbnb generates revenue by charging hosts 3% and guests between 6% and 12% on stays. The company has not officially filed for an IPO yet, so specific revenue and income figures are still unknown.
But the company does face some challenges on the regulatory front…
In New York, for example, Attorney General Eric Schneiderman has claimed that 75% of Airbnb's rentals are illegal and violate hotel tax laws. The company's ongoing battle with regulators will be a storyline to watch moving forward.
For now, it's impossible to make a prediction on the size of the Airbnb IPO or the value of Airbnb stock. However, the company's disruptive technology ensures the initial public offering is one to watch in 2015.
15 Tech IPOs in 2015 to Keep on Your Radar
Tech IPOs in 2015: Wall Street is coming off a great year of initial public offerings. In fact, 2014 saw more IPOs than any year since the height of the dot-com era in 2000.
Renaissance Capital, a manager of IPO-focused ETFs, reported 275 stock launches last year. That's a 23% increase from 2013. Last year's record number of IPOs also lent a huge hand 2014's bull market.
"While various global events, such as Russia's incursion into the Ukraine and conflicts in the Middle East, caused nervousness in global markets, they largely failed to disrupt the U.S. IPO apple cart," Renaissance Capital experts told Business Insider.
And a major part of that was huge tech IPOs. E-commerce giant Alibaba Group Holding Ltd. (NYSE: BABA) became the biggest U.S. IPO in history in September 2014. King Digital Entertainment Plc. (NYSE: KING), maker of the Candy Crush Saga mobile game, raked in $500 million from its offering last March. After its June 2014 launch, GoPro Inc. (Nasdaq: GPRO) stock skyrocketed almost 200% within four months.
But it won't stop there. The tech sector should continue to dominate the 2015 IPO landscape.
That's why we're keeping an eye on the biggest tech IPOs in 2015.
Here's a look at 15 companies with a real or rumored valuation of at least $1 billion to watch this year…
Upcoming Tech IPOs in 2015
Tech IPO in 2015 No. 1: Uber Inc. is by far the highest valued startup on the market right now. For investors, the biggest appeal is the untouched market it's disrupting. There's hardly been any competition in the taxi industry up until now. With Uber, consumers have a third option besides taxis and private car services. The company raked in about $213 million in revenue in 2013. According to the company, revenue has been doubling every six months. Uber also boasts an annual growth rate of nearly 145%. Since 2009, Uber has raised $2.8 billion in funding. It's currently valued at $40 billion. Uber will likely put off an IPO until later this year to address recent scandals that could deter investors.
Tech IPO in 2015 No. 2: Spotify has become a worldwide leader in music streaming. In November, the service had 12.5 million paying subscribers worldwide. That's up from 6 million in 2013. The number of non-paying subscribers is four times that at 50 million.
Spotify's service is available in 57 different countries. There are roughly 1.5 billion music playlists that have been created on Spotify. Compared to other services, the company has the "paid subscriber" demographic in the bag. Pandora has twice as many listeners as Spotify, but Spotify triples their amount of paid listeners.
The company earned $577.1 million in revenue in 2012. It also raised $250 million in funding in March 2014 from Technology Crossover Ventures, which backed the Netflix Inc. (Nasdaq: NFLX) and Facebook Inc. (Nasdaq: FB) IPOs. As of July 2014, Spotify was valued at $10 billion.
Tech IPO in 2015 No. 3: Inovalon Holdings Inc. is an analytics and data service provider for the healthcare sector. The Maryland-based company also partners with companies on an array of health-related research studies. Inovalon's data is the driving force behind everything from health plans to hospitals. Its most notable client is drug retailing giant Walgreens. Inovalon reported $51.9 million in income from Q1 through Q3 2014. That's up from $27 million in 2013. The company filed for its IPO on Dec. 30, 2014. It hopes to raise $500 million.
Tech IPO in 2015 No. 4: Pinterest could become the last popular social media company to go public behind Facebook and Twitter Inc. (NYSE: TWTR). Pinterest is a scrapbooking site allowing users to manage topical or themed "pins" through collections known as "pinboards." The site is notably popular among women due to its emphasis on clothes, recipes, and child-related activities. Pew Research Center found that women are more than four times more likely to use it than men. It currently has 40 million monthly active users. Pinterest has a $5 billion valuation, joining an exclusive club of startups valued between $5 billion and $10 billion like Spotify and Snapchat.
Tech IPO in 2015 No. 5: Snapchat stunned the tech world when it declined Facebook's $3 billion acquisition in November 2013. That same month, CEO Evan Spiegel also turned down Google Inc.'s (Nasdaq: GOOGL) $4 billion offer. Many criticized the moves at first, but the photo messaging app has exploded since. Snapchat currently boasts 100 million monthly active users. According to The Wall Street Journal, its number of users is second only to Facebook's Messenger in the Apple App Store. The company raked in $163 million in funding last December. It also recently hired Imran Khan – the Credit Suisse banker who managed Alibaba's record-shattering IPO. Snapchat is valued at $10 billion by investors.
Tech IPO in 2015 No. 6: GoDaddy Inc. is a web domain company that also sells e-business software and services. It has more than 12.2 million customers and about 57 million domain names. GoDaddy is known for its racy ads featuring models and celebrities, which has created strong brand awareness in the United States. That will make it one of the most talked about IPOs in 2015. But GoDaddy is not on our "best investments of 2015" list. Right now, the company is not profitable. It had a massive loss of $89 million in the first half of 2014. Despite that, it's currently seeking a $4.5 billion valuation. The company filed for its IPO on June 9, 2014 and hopes to launch early this year.
Tech IPO in 2015 No. 7: Xiaomi Inc. is the third-largest producer of smartphones in the world behind Apple Inc. (Nasdaq: AAPL) and Samsung. Research firm IDC estimates that about 500 million smartphones will be sold in China this year. That's more than three times as many as will be sold in the United States. But profits are still an issue, because the company sells its products cheap. So cheap in fact, they're actually sold near their break-even point. The average Xiaomi device retails around $150. Xiaomi is ready to join the ranks of other huge Chinese stocks like Baidu Inc. (Nasdaq ADR: BIDU) and Alibaba. In late December, Xiaomi mustered $1.1 billion in its latest funding round. The company is valued in the $50 billion range.
Tech IPO in 2015 No. 8: Egnyte Inc. is a file-sharing service provider founded in 2007. The California-based company offers a hybrid approach allowing users to store data across local, private, and public clouds. Some well-known customers include Cracker Barrel, IKEA, and Red Bull. Egnyte is much smaller than competitors Dropbox and Box. But its hybrid model doesn't burn through money like the other two's "freemium" models. That higher revenue flow gives it a leg up in investment potential. The company has received $62.5 million in funding over five rounds from eight investors.
Tech IPO in 2015 No. 9: AppNexus is a New York City-based Internet advertising company. Its technology allows publishers and advertisers to manage digital ad inventory. Over 30 billion ads are auctioned and sold on AppNexus each day. In 2012, it handled about $700 million in ad spending. AppNexus took in an estimated $130 million in revenue in 2013. The company has raised $200 million in funding as of last August. Its valuation was $1.2 billion as of August 2014. AppNexus became New York's first billion-dollar tech company.
Tech IPO in 2015 No. 10: Dropbox is a file hosting service that offers online cloud storage software. Dropbox allows users to create folders on their computers that can synchronize with other devices. The San Francisco-based company has raised about $1.1 billion in funding from investors that include T. Rowe Price, Goldman Sachs (NYSE: GS), and Accel Partners. However, growth rates have dropped. Between 2012 and 2013 the company only added $4 million in revenue, a growth rate of 3.6%. The company is projected to reel in $400 million in 2014 revenue. After raising $350 million in its January funding round, Dropbox is reportedly valued at $10 billion.
Tech IPO in 2015 No. 11: Airbnb Inc. is a social networking service allowing users to rent real estate properties. Airbnb has been facing legal troubles regarding its regulation. New York Attorney General Eric Schneiderman reported that 75% of the company's rentals are illegal and violate hotel tax laws. But Airbnb listings keep growing, up to 975,000 from 350,000 last year. The company had 10 million guest stays between 2007 and 2013. Airbnb has raised about $800 million and is currently valued at $10 billion. But the valuation could jump to $13 billion after the company's next round of funding.
Tech IPO in 2015 No. 12: Qualtrics provides data software that enables companies to collect market research, customer satisfaction data, employee evaluations, and website feedback. The company has 6,000 customers worldwide. They include half of the Fortune 100 and 99 of the top 100 business schools. Last September, it secured $150 million in a Series B funding round. That brought the company's total outside funding to $220 million. Qualtrics is currently valued at $1 billion.
Tech IPO in 2015 No. 13: Square Inc. offers mobile payment readers that allow anyone to accept credit cards on their Apple or Android devices. It provides Square Reader, a stamp-sized add-on that reads and accepts credit card payments. Square also offers Square Register, an app that works with Square Reader to turn a smartphone into a mobile point of sale. According to CrunchBase, the San Francisco-based company has received $590.5 million in seven rounds from 35 investors. Square is valued at $6 billion.
Tech IPO in 2015 No. 14: Actifio is an information technology firm headquartered in Waltham, Mass. The company specializes in data storage and copy data virtualization. Its innovative storage methods separate it from competitors. The company has won over clients by minimizing costs associated with storing copies of identical business data. In its most recent funding round, Actifio raised $100 million. It has received a total of $207.5 million over five rounds. The company is valued at more than $1 billion. It's expected to go public in the second half of 2015.
Tech IPO in 2015 No. 15: Etsy Inc. is an online marketplace focused on handmade crafts and vintage goods. These include art, photography, clothing, food, knick-knacks, and toys. Etsy was founded in 2005 and by 2008 the e-commerce site had 1 million registered users. There were about 40 million as of June 2014. So far, the company has generated $97.3 million in eight rounds of funding. It's currently looking to raise $300 million through an IPO, and is valued at more than $1 billion. Bloomberg reported that Etsy could hold an IPO as soon as this quarter.
Here's What Happens During the IPO Roadshow Process
The Etsy IPO roadshow has been underway since April 1. The stock is expected to start trading April 16. One thing not every investor understands, but should, is what happens during the IPO roadshow process, and why it is so important.
An IPO roadshow – sometimes referred to as a "dog and pony show" – is one of the many steps that a company goes through in marketing its IPO.
But it's by far the most important step. According to a study by Ernst & Young, roughly 82% of institutional investors worldwide cite a roadshow's quality as a key component in their buying decisions.
Here's a detailed breakdown of what happens during the IPO roadshow process…
What Happens During the IPO Roadshow Process?
The IPO roadshow occurs sometime between when a company sets the deal's terms and when the deal hits the market. For two weeks during that period, the company travels across the country to make one final sales pitch to potential investors.
The show usually stops at the major financial centers such as New York, San Francisco, Boston, Chicago, and Los Angeles. The company may travel to international destinations like London or Hong Kong if appropriate.
At each stop on the tour, the IPO underwriters introduce the company and its executives. The company's senior management explains the company's history and demonstrates its growth potential to audiences.
The executives typically give a presentation providing financial information that will attract deep-pocketed investors. The show usually includes the firm's business outlook, why it's launching an IPO, investment growth, possible opening stock price, earnings figures, and a Q&A session with analysts and investors.
The IPO roadshow can be a very grueling process since it can require up to five presentations each day. But each presentation is vital for the deal's success.
"Road shows allow you to tell your corporate story, but they also enable you to showcase the talent, caliber, and integrity of your management team through an organized, orchestrated, smooth presentation," noted a report by PricewaterhouseCoopers.
Pulling off a successful IPO roadshow means doing more than just giving the facts. It involves giving prospective investors something that can make or break an IPO…
One Thing That Ensures a Successful IPO Roadshow Process
Many companies make the fatal mistake of promoting their IPO strictly through facts and figures – but it's called a "dog and pony show" for a reason.
The company's management has to combine the data with an interesting and entertaining story. The "show" needs to be delivered with passion to make the audience enthusiastic about the investment opportunity.
Alibaba underwriters and executives – including Founder and Chairman Jack Ma – presented the stunning statistics investors had anticipated. The total value of transactions via the company's services reached a massive $296 billion between June 2013 and June 2014. There were 279 million annual active buyers placing 14.5 billion orders over that same period. Alibaba is the world's largest online retailer by average merchandise volume.
But the company's beautifully shot introduction warmed audiences up before hitting them with figures. The eight-minute video begins with Jack Ma briefly discussing Alibaba's humble beginnings and mission. The video then shows how Taobao and Tmall – both operated by Alibaba – has personally influenced several different people across different regions of China.
"When I first saw Taobao, I knew very little about the Internet," says Ding Hongyu, a Chinese painter depicted in the video. "A month after posting my paintings online, I sold my first one. Taobao gave me hope."
The video concludes with a closing speech from Ma. He summarizes how Alibaba's spirit is geared toward improving overall quality of life.
Alibaba became the most successful U.S. IPO of all time on Sept. 18. It raised $21.8 billion and skyrocketed 75.2% less than two months after its debut.
2015 IPOs in Tech Are in for Blockbuster Run – Here's How to Profit
With the markets pushing toward new highs nearly every week, investors wonder how long the bull will keep running. The answer is simple: The bull will run for as long as fresh cash keeps feeding it.
And judging by the way the 2015 IPOs are shaping up, it's safe to say you should look for the bull to keep running through most of the year.
Although it was a slow first quarter, we've already seen some notable 2015 IPOs – GoDaddy Inc. (NYSE: GDDY) raised $460 million and is valued at more than $4 billion. We also saw healthcare analytics company Inovalon Holdings Inc. (Nasdaq: INOV) raise $600 million on Feb. 12, selling 22.2 million shares at $27.
And right now all eyes are on Etsy (Nasdaq: ETSY), the Brooklyn-based e-commerce website set to go public on April 16. With a price range of $14 to $16 per share, the company is expected to raise at least $250 million. Following the IPO, Etsy will boast a valuation of $1.8 billion.
And as exciting as those 2015 IPOs are, the best is yet to come.
According Business Wire, in a recent survey of investment bank executives, fully 78% are forecasting that IPO activity in 2015 will either match 2014 (35%) or exceed 2014 (43%). The report added:
"In terms of how individual industries will fair in 2015, close to three quarters (73%) of those in the investment banking community are predicting an increase in offerings from the technology industry and better than two-thirds are forecasting an increase in IPOs in biotech (69%)."
Merely equaling last year's performance would still make 2015 a benchmark season for tech IPOs. After all, 2014 saw more IPOs than any year since the height of the dot-com era in 2000.
Leading the 2015 tech IPO pack is Uber Inc. The company has seen an annual growth rate of 145%. Since 2009, Uber has raised $2.8 billion in funding. It's currently valued at $40 billion.
Also on deck for 2015 tech IPOs are the following companies…
2015 IPOs in Tech to Watch
2015 IPOs to Watch, No. 1: Airbnb Inc., a social networking service allowing users to rent real estate properties. Airbnb has raised about $800 million and is currently valued at $10 billion. But the valuation could jump to $13 billion after the company's next round of funding.
2015 IPOs to Watch, No. 2: Dropbox, a file hosting service that offers online cloud storage software. After raising $350 million in its January funding round, Dropbox is reportedly valued at $10 billion.
2015 IPOs to Watch, No. 3: Valued at $6 billion, Square Inc. offers mobile payment readers that allow anyone to accept credit cards on their Apple or Android devices.