Postmates’ IPO holdup is the latest example of shifting investor focus

Postmates decided to postpone its IPO, the latest example of high-flying IPO hopes to come crashing down to reality this year.

The IPwoes keep rolling in. Smelling blood in the water, the meal-delivery startup Postmates (valued at $2B) decided to postpone its initial public offering this week… and will potentially avoid the fate of other companies that crashed and burned before it.

Postmates’ IPO holdup is the latest example of shifting investor focus

This shoulda been the year of the mega-IPO

But shoulda, woulda, coulda.

Some IPOs — notably WeWork’s — failed to materialize, and many of the 32 tech startups that went public this year underperformed spectacularly, appreciating by an average of just 5%. For comparison, the return rate was 13% in 2018 and 94% in 2017. Oh, how the mighty — by which we mean Uber, Slack, and Peloton — have fallen.

As for Postmates, it filed IPO paperwork in February but then seemed to get cold feet. At a recent conference, Postmates CEO Bastian Lehmann said the company second-guessed its timing due to the markets being “a little choppy when it comes to growth companies specifically.” 

Postmates is expected to get rolling on its IPO — again — early next year.

Who’s crying now

SoftBank, which invested heavily in startups including Uber and WeWork only to lose $5B, is one casualty. SoftBank’s shares have dipped 30% from their peak earlier this year.

Others, meanwhile, have expressed a shift in focus to profits. Bird CEO Travis VanderZanden said recently that the company had pulled in $275m in fresh funding as it revamped its practices to prevent more losses. 

Silicon Valley is facing a Wall Street reckoning

Public market investors aren’t interested in sky-high valuations — which are largely arbitrary. They want to see gross margins — a measure of profitability — and more detailed financial models. Hype is fun and all, but fiscal responsibility matters more.

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