No IPO Anytime Soon
By Wed, May 6, 2020
Hey Scoopers,
The stock market continued its upward movement for the second day in a row as the earnings reports poured in. — More on that in the “Overall Market” section.
Beyond the overall market, once again, one company celebrated the impact of the COVID-19 pandemic on its revenue, while another company struggled to avoid bankruptcy. — More on that in the “What’s Up?” and “What’s Down?” sections.
Oh, by the way, it seems that new IPOs are the next victims of the COVID-19 pandemic. — More on that in the “Water Cooler” section.
But, first, here is a recap of what happened in the market yesterday:
Market Recap
- U.S. markets: All three indices finished Tuesday in the green. Scroll down to the “Overall Market” section to read more.
- Cryptocurrency: Bitcoin’s price hovered just below the $9,000 range.
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The Earnings Season Continues.
The Nasdaq index led the market with more than 1% gain on Tuesday, and the S&P 500 and the Dow followed. All sectors, except the Financial Services, ended the day in the green too. In the absence of any significant economic or political news, the market reacted to the earnings reports as the earnings season continues.
Can It Keep The Growth Up?
So, what happened?
Shares of Wayfair (Ticker: W) were up more than 23% on Tuesday. The online furniture retailer reported its quarterly earnings and impressed investors pretty well. The number of active users and net revenue were both up more than 20%, and investors celebrated the news. The concerning parts that are being ignored by investors are that the company is still not profitable and doesn’t generate free cash flow. And, the average order value wasn’t up either. The stock price jump seems to be driven by sentiment. Based on those numbers, we can’t conclude that the company is going to be performing as well, once we are done with the COVID-19 shelter-in-place restriction.
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Need Cash
So, what happened?
Shares of Norwegian Cruise Line (Ticker: NCLH) were down more than 22% on Tuesday. Earlier in the day, the company warned that it may pursue bankruptcy. Later on, the news came out that it is issuing more than $600 million junk bond paying double-digit yield and more than $350 million new shares offering to navigate the COVID-19 waters. It’s a very tough situation for cruise line operators such as NCLH. The company needs more cash to survive, and there is no way to make sure it can withstand the crisis if it continues for much longer.
IPOs Are The Next Victim.
So what happened here?
In Silicon Valley, there is one startup that sits above all. Not only is it a poster child of Silicon Valley’s success, but it also acts like an adult. The leaders don’t get emotional, they take responsibility for their actions, they are friendly, they are loved. That company is Airbnb, and so many people have been waiting for it to go public.
However, it looks like even Airbnb is not safe from the COVID-19 pandemic. The company just announced that it is going to lay off 25% of its employees. It seems that we shouldn’t be expecting an IPO anytime soon.
As a matter of fact, IPOs are the new victim of the COVID-19 pandemic. It’s hard to predict when the company will be ready to IPO again.
If you have any IPO-related comments, email us at members@tradestocks.com.
About the Author
The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card
