Name: Why are there so many IPOs during a pandemic? Here are 4 reasons
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Why are there so many IPOs during a pandemic? Here are 4 reasons

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advertisementadvertisementIt’s a big month for IPOs: Airbnb and DoorDash are both going public this week, and online video game company Roblox and fintech Affirm are set to follow. DoorDash sold shares at $102 (above estimates), and then at $189. How is this happening in a country gripped by a coronavirus pandemic and high unemployment? In the topsy-turvy logic of the stock market, financial wins are possible. Here are a few reasons why:advertisementDoorDash is illustrative: Its third-quarter revenues were up 268% from last year, and with its order volume from January to September up threefold from a year earlier. Is there a better time to IPO? No. Particularly given that revenues may well plummet post-pandemic. Under similar pandemic spikes in business, biotech IPOs have this year.Airbnb is going public today, in one of the few recent IPOs from a company that has been deeply wounded by the pandemic. Why now? Airbnb was under pressure from who have waited over a decade to cash out, some of whom have stock option restrictions that expire early next year. That detail alone shows how a pandemic IPO makes sense. The company also had other incentives to raise capital, including a high-interest rate on a recent $1 billion crisis funding deal, The Wall Street Journal in April. In short: Even a bad IPO today would still meet a number of business objectives.Investors are putting their wallets behind the idea that the economy will roar back into action immediately post-pandemic. Whether that’s true or not remains to be seen: A recent warned that the sort of economic damage America will experience this winter is not swiftly reversible without a massive stimulus package. But in the markets, perception and hype are everything, and current common wisdom is that it’s best to get in now and not miss out on next year’s supposed surges, especially with vaccines on the way. Mad Money host Jim Cramer’s on Airbnb is illustrative: “I want you to own Airbnb because it’s set to have a terrific year starting next March.”advertisementWall Street quickly realized in late spring that IPO roadshows, where CEOs pitch investors, translate well into online form—at least for well-known companies that easily attract investor meetings. There are to doing this process virtually: Rather than spending a month traveling around the world, executives can talk to investors back-to-back for a week online and then IPO, thereby not risking the markets collapsing during the month-plus that this process previously took.advertisementadvertisementadvertisementadvertisementadvertisement

advertisementadvertisementIt’s a big month for IPOs: Airbnb and DoorDash are both going public this week, and online video game company Roblox and fintech Affirm are set to follow. DoorDash sold shares at $102 (above estimates), and then at $189. How is this happening in a country gripped by a coronavirus pandemic and high unemployment? In the topsy-turvy logic of the stock market, financial wins are possible. Here are a few reasons why:advertisementDoorDash is illustrative: Its third-quarter revenues were up 268% from last year, and with its order volume from January to September up...

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Arianne Cohen

Fast Company is a monthly American business magazine published in print and online that focuses on technology, business, and design. It publishes eight print issues per year. Fast Company was launched in November 1995 by Alan Webber and Bill Taylor, two former Harvard Business Review editors, and publisher Mortimer Zuckerman.

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Why are there so many IPOs during a pandemic? Here are 4 reasons

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