2018 was quite a year for IPOs.
There were 188 of them, raising up to $45.7 billion. By the way, that’s about 47% greater than 2017. More than likely, we would have seen more if it weren’t for the crazed volatility.
"The market volatility and market sell-off had a direct impact on the IPO market," said Matthew Kennedy, IPO market strategist at Renaissance, as quoted by Business Insider. "It's extremely difficult to price IPOs when markets are this volatile. Companies will just wait until next year."
Three of the Top IPOs of 2018
Top IPO No. 1 -- DocuSign Inc. (DOCU)
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DOCU provides cloud-based transaction products and services in the United States. The company offers e-signature solution that enables businesses to digitally prepare, execute, and act on agreements. It serves large enterprises, sole proprietorships, small- to medium-sized businesses, professionals, and individuals.
Out of the gate, DOCU exploded from $37.50 to more than $67.
Unfortunately, given market chaos, the stock sank back to its IPO price. However, it would appear there’s still sizable opportunity here.
DocuSign CEO Daniel Springer believes DocuSign has substantial room for growth. "First, every organization on the planet signs agreement -- big businesses, small businesses, government agencies and not for profit," Springer said. "As a result, our [total addressable market (TAM)] is substantial. We estimate our core eSignature business' TAM at $25 billion, which is largely under-penetrated. This TAM is becoming available as organizations worldwide make the transformation from paper to eSignature.”
CFO Michael Sheridan added that, “We continue to achieve strong upsell in Q3, resulting in a net dollar retention rate of 114%. Strong upselling was also reflected in the number of customers at ACV greater than $300,000 which grew 57% year-over-year to a total of 285 customers.
Making a good case for DocuSign's ability to grow customer spend, most of this growth in customers with ACV over $300,000 came from existing customers who increased their volume and expanded their uses cases.”
Top IPO No. 2 – Dropbox Inc. (DBX)
Dropbox Inc. provides a collaboration platform worldwide. Its platform allows individuals, teams, and organizations to create, access, and share content online.
DBX couldn’t catch a break this year either.
After running from $28 to $44, the stock plummeted to less than $20 on market volatility.
However, while it’s down on its luck, there is good reason to watch the stock.
DBX has more than 500 million registered users.
It also has more than 12 million paying users. Analysts also believe DBX may be able to convert as many as 200 million into paying ones over time. That's the kind of growth investors like. Plus, the business appears sound. And most of the downside we’ve seen has more to do with the overall market than the operations of the company.
Top IPO No. 3 – IQIYI Inc. (IQ)
Q provides online entertainment services under the iQIYI brand name in China. It operates a platform that provides a collection of Internet video content, including professionally produced content licensed from professional content providers and self-produced content. The company also operates movie theaters in China. In addition, it provides membership, content distribution, live broadcasting, and online gaming services.
The company is already seeing sizable growth. In China alone, subscribers have grown from 10 million in 2015 to 50 million as of the end of 2017. Analysts believe there’s still substantial growth ahead. IQ’s revenue grew by 57% to $777 million in its first quarter. In addition, in 2017, the company posted full-year sales of nearly $2.7 billion with further growth likely.
IQ had a great run, initially running from about $15 to than $45. An overall market pullback put a quick end to that. The stock is now below its IPO price. However, that may be overdone.
Going into 2019, some analysts do expect a cautious start to the year, given 2018 volatility.
After that, we could see massive public offerings from Uber and Lyft, both of which recently filed to list with the US SEC.
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