Last year, it felt as though the world had IPOs coming out of its ears. Between Uber and Zoom and Beyond Meat and Saudi Aramco, there was a steady lineup of billion dollar companies going public.
Back in May, we wondered if any businesses would dare to float on the stock market in 2020, given the economic downturn caused by the coronavirus crisis.
As it turns out, you can’t hold them back.
Fresh off the back of Airbnb confidentially filing its IPO paperwork, we’ve seen several startups file for IPO, including Snowflake, Palantir, and Ant Group, in the last few weeks. And why not? With the stock market having a stellar run, it seems like a good time to cash in.
We’re always interested in IPOs at Spaceship, but these three in particular piqued our interest.
Snowflake is a cloud-based data warehouse service last valued at a cool US$12.5 billion.
That sounds like a big number, but Snowflake deals in big numbers and big names.
It has more than 2,000 employees in locations around the world. It also counts Google Cloud, Amazon Web Services and Microsoft Azure as partners. And now the company has plans to raise up to US$3 billion, which would make it one of the world’s biggest tech IPOs of the year.
Perhaps most notably, some of that money will come from Berkshire Hathaway, the firm of investor Warren Buffett. This would reportedly be the first IPO that Berkshire Hathaway has ever participated in. In fact, the last time Warren Buffett participated in an initial public offering, Dwight Eisenhower was president of the United States.
That all sounds rather wholesome, especially when compared to Palantir.
Palantir is an analytics firm used by government agencies such as the US Defense Department, among others, to integrate data, decisions and operations into one platform. It has faced wide criticism, even from within its own walls, because of its data collection and surveillance work.
For an example of this, look no further than 2017, when the Trump administration turned to Palantir to map out the families of thousands of children who were crossing the border into America to reunite with their families. Using Palantir’s software, Immigration and Customs Enforcement agents arrested 443 people.
The company makes no apologies for its practices, though. CEO Alex Karp recently said: “We have certain beliefs and we will stick with those.” Having said that, and perhaps in an effort to avoid scrutiny, Palantir initially chose to confidentially file paperwork to go public, which allowed it to avoid sharing some financial figures and potential risks.
Speaking of risks, Ant Group, an affiliate company of Chinese retailer Alibaba, has cited the potential for US sanctions as a risk to its business. Nevertheless, the financial services group, controlled by Alibaba founder, Jack Ma, is going public.
And when it does, it could be the largest IPO in history.
Ant Group is reportedly seeking a valuation of between US$200 and US$300 billion. If it rakes in US$30 billion (or more), it would be the largest in history, topping Saudi Aramco, which went public last year, and Alibaba, which went public in 2014.
Despite this, Ant Group would still sit behind PayPal in terms of fintech market share. PayPal had around 14.5% of the fintech market in 2019, while Ant Group had around 8%, and this is likely where the potential for US sanctions could cause a hiccup.
The Spaceship Universe Portfolio and the Spaceship Origin Portfolio invest in Alibaba at the time of writing.
Important! We’re sharing with you our thoughts on these companies for your informational purposes only. However, we are not making recommendations to buy or sell holdings in a specific company. Past performance isn’t a reliable indicator of future performance.
