Jan 27, 2020 - Economy & Business

The IPO-pocalypse didn't last long

WeWork logo.
Photo: Alex Tai/SOPA Images/LightRocket via Getty Images

The IPO-pocalypse sure didn't last long.

What's happening: Three months after WeWork pulled its offering, we're expecting an offering above $1 billion this week and another next week. It also appears that mattress maker Casper will push forward with its listing, albeit as an "undercorn."

  • First up will be Reynolds Consumer Products, which is best known for its aluminum foils, plastic wraps and Hefty trash bags. At the top of its range, it would raise around $1.3 billion at a $5.7 billion market cap.
  • Next week we should get PPD, a private equity-owned pharma contract research group that could raise $1.6 billion at a $9.2 billion market cap.

Yes, both of these are profitable, well-established companies. And few pundits seem to care about the unprofitable biotechs that also expect to price this week (sorry biotechs — maybe you should do something more interesting than curing our diseases and saving our lives... have you considered scooters?).

So that brings us to Casper Sleep, the unprofitable, upstart mattress maker that was inexplicably valued like a tech company by venture capitalists.

  • Casper this morning set IPO terms that seemed to acknowledge how the private markets erred.
  • If it prices at the top of its range, the company would be valued at around $744 million, which is well shy of the unicorn valuation it previously received (no, the fully-diluted value doesn't get you there either).
  • But, but, but: The very fact it's launching its road-show, in the face of ongoing skepticism, suggests that the macro IPO chill has thawed. Or at least that bankers are willing to take the reputational risk.

The bottom line: No one company's failings, no matter how massive, can single-handedly derail the broader equity or capital markets. That's true whether it's WeWork, Boeing, or whatever misery comes next.

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