Endeavor’s reservations are unsurprising, given the way the IPO market has recently been behaving. Its China-based rival Wanda Sports Group Co (NASDAQ: WSG), which made market debut in July, had to downsize its offer price to a modest $8 per share. Yet, the stock is currently trading at around half this price.
The primary reason for this is the shifting investor tendency to ditch hype-driven firms. Earlier, there was a general attitude to invest in the popularity of stocks, despite their balance sheets being hollow. With economies around the world slowing down and M&A activity taking a back seat, investors seem to have lost the appetite to take unnecessary risks.
READ: Major IPOs expected in late-2019 or 2020
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While pricing a stock is already a tricky thing, the ignorance of underwriters towards this tectonic shift is partly responsible for the lackluster performance of most of the IPO stocks. If you look at it, all the dud IPOs – including Uber, Lyft, Peloton and teeth beautifier SmileDirectClub (NASDAQ: SDC) – are loss-making firms without a proper roadmap to profitability.
WeWork, which was expected to have one of the largest offerings this years, postponed its IPO amid investor concerns on its mounting liabilities and losses. When there are IPO stocks like Zoom Video Communications (NASDAQ: ZM) that are already in the profitability space, it makes little sense of experimenting in a cloudy market.
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