The year 2020 was a fantastic year for IPO investors who benefited from both the number of IPOs and their outsized average returns, despite the pandemic. In the United States, initial public offerings hit a new record.
Value of IPOs Larger than in 2018 and 2019 Combined
The management of a private company has a lot of control over its operation. However, raising funds from investors is more complicated. To access funds from regular investors, companies go public by offering stock shares at a certain price. As a result, they get more capital to work with.
In 2015, the US capital markets witnessed 162 initial public offerings, revealed the Statista data and the PWC 2020 Annual Capital Markets Watch. After plunging to 100 in 2016, the number of IPOs jumped to 176 in 2017.
Statistics show that 2018 and 2019 saw 214 and 195 IPOs, respectively. However, 2020 delivered a new record as the number of IPOs jumped to 407, despite the COVID-19 crisis.
This surge was mainly caused by the significant rise in the number of special purpose acquisition companies (SPACs) that went public last year. Statistics show that special purpose SPACs raised $71bn across 230 IPOs, the highest value in a single year.
The technology, media, and telecom companies raised $35.5bn across 57 IPOs ranking as the second leading sector last year. Pharma and life science sector followed with $20.7bn and 86 IPOs, respectively.
The PWC data also indicate the US companies raised more capital through IPOs in 2020 than in 2018 and 2019 combined.
Snowflake, Airbnb and DoorDash Raised $11B, three Largest IPOs in 2020
Statistics show tech companies had a huge role in setting a new record value of capital raised through IPOs. Three of the ten biggest tech IPOs in the United States all happened last year.
In September, the US cloud data warehousing firm, Snowflake, went public at $120 a share, well above the expected range of $100 to $110. On the first day of trading in the biggest software IPO ever, the company’s stock price doubled and hit $245 a share. Snowflake sold 28 million shares and raised nearly $3.9 billion from the IPO.
Three months later, the San Francisco-based vacation rental online marketplace company, Airbnb, raised $3.7bn in its widely anticipated IPO. The company went public at $68 a share, way above its original pricing range of $44 to $50. The stock soared 112.8% to end its first trading day close at $144.71. Airbnb has only risen from there, with its stock price standing at over $212 last week. Airbnb’s stock performance is quite impressive, given that the pandemic almost drove the company out of business last spring.
The food delivery service company, DoorDash, raised $3.4bn the same month, in the third-largest IPO last year. In an S-1 filing ahead of its initial public offering, the company revealed that revenues soared 226% YoY to $1.92bn in the nine months of 2020.
Investors were impressed, with the IPO pricing at $102 a share, above the $90-to-$95 expected range. DoorDash only rallied from there, soaring 85% on its first trading day to close at $189.51. The stock price of the food delivery giant stood at nearly $203 last week.
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