Shulou(Shulou.com)11/24 Report--

Technology investors finally heard their favorite news: IPO (initial public offering).

The US technology IPO market has dried up for nearly 20 months, and who will break the deadlock has become a hot topic in Silicon Valley. On Friday, Instacart, the largest online grocery delivery company in the United States, and Klaviyo, a data and marketing automation company, filed to go public. Earlier, ARM, a chip design company owned by Softbank Corp. Group, said it would be listed on NASDAQ.

The three companies have little in common, but overall, the IPO will test how excited investors are about new opportunities. Based on the performance of the three companies, other companies will decide whether to follow up in the fourth quarter of this year.

Lise Buyer, founder of Class V Group, an IPO consulting service, said: "the listing teams of other companies will follow the market reaction to these IPO before deciding whether to go public." In any case, Buyer believes that it will be difficult for technology companies to get such high valuations in the short term compared with the high valuations achieved in 2020 and 2021.

Today, Instacart's valuation has been greatly discounted. At the beginning of 2021, Instacart was valued at $39 billion. But its valuation slashed to $24 billion in March last year because of a collapse in technology stocks and a slowdown in growth in the post-epidemic era. Instacart valuations were reported to have fallen by another 50 per cent by the end of 2022.

In listed companies, takeout platform DoorDash should be the most suitable reference for Instacart. Currently, DoorDash has a price-to-sales ratio of 3.8x (price-to-revenue ratio). Based on the city's sales rate, Instacart is valued at about $11 billion.

In the most recent quarter, Instacart's revenue was $716 million, up 15 per cent from a year earlier. The company has made a profit for five consecutive quarters through cost control and layoffs. Net profit was $114 million, compared with $8 million a year earlier.

The valuation of Klaviyo, which was valued at $9.5 billion in 2021, has not changed much. Founded in 2012, the company is dedicated to helping customers store user data and build profiles for targeted marketing through e-mail, text messages and other channels.

Although Klaviyo has low brand awareness, it is growing much faster than Instacart. In the second quarter of this year, Klaviyo's revenue was $164.6 million, up 50 per cent from a year earlier. Net profit was $10.9 million, compared with a loss of nearly $12 million in the same period last year.

The ideal reference for Klaviyo is the Bessemer Cloud Index (Bessemer Cloud Index), which is made up of about 70 listed cloud companies. The price-to-sales ratio of the index is about 12, while the growth rate of Klaviyo is close to the top of the index. Based on that, Klaviyo is valued at about $7 billion.

Buyer, founder of Class V Group, an IPO consulting service, believes that it is not surprising that these companies are now applying to go public. According to the Securities and Exchange Commission (SEC), management teams and bankers have to wait at least 15 days before starting the roadshow after filing an IPO application, while the listing is likely to take place in two weeks' time.

For companies that submitted applications last week, they can launch a roadshow in early September, after Labor Day, and go public in mid-September. "historically, late August is the time for companies to submit applications, which is a reasonable time," Buyer said. "based on its market performance, it may also stimulate other companies to go public in the fourth quarter."

Unlike Instacart and Klaviyo, the two companies are likely to have a significant impact on start-up investors when looking forward to the second half of this year and next year, but ARM has a slightly different audience. ARM is a company owned by Softbank Corp.. Softbank Corp. has lost billions of dollars due to over-investment in recent years and is now looking for liquidity.

At present, ARM is much larger than a typical venture capital firm. Moreover, it is headquartered in the UK and used to be a listed company. For the 2023 fiscal year ended in March, ARM had revenue of $2.68 billion and net profit of $524 million, according to the filing.

Softbank Corp. bought ARM for $32 billion. To achieve that valuation, ARM needs to be trading at a price-to-earnings ratio of about 61. In the semiconductor market, Nvidia trades at 114 times earnings, far ahead of other companies.

But it is a company that has quadrupled its market capitalization this year and expects revenue to grow 170 per cent in the third quarter of fiscal 2024 to the end of October. By contrast, for other companies in the chip sector, Qualcomm trades at 15 times earnings and Applied Materials at 19 times earnings.

At the same time, the growth of the technology industry may be slowing. This year, the Nasdaq index is up 30%, its worst performance since 2008. The Nasdaq index is down 5.3% so far in august, which could be the first monthly decline since February.

At some point, some companies will have to stop watching the market and set only one listing schedule, Buye said. Because since the listing of HashiCorp and Samsara in December 2021, there has not been a well-known venture capital-backed technology company IPO in the United States.

The market determines the value of a company, but if it performs well over time, there will always be an opportunity to sell shares at a higher price. "you have to prove your worth in the market," Buye said.

Welcome to subscribe "Shulou Technology Information " to get latest news, interesting things and hot topics in the IT industry, and controls the hottest and latest Internet news, technology news and IT industry trends.