If you're considering investing in one or more recent initial public offerings, you've got a lot of solid options. A host of interesting and much-anticipated IPOs, largely in the tech and biotech realms, have occurred this year.
Three 2019 IPO stocks worth putting on your watch list are Pinterest, Zoom Video Communications, and ShockWave Medical.
Image source: Getty Images.
2019's U.S. IPO market overview
This year's U.S. IPO market got off to a slow start, but picked up steam in the second quarter. In the first half of 2019, 88 companies joined the ranks of the publicly traded, 66 of them in the second quarter. While that total is down 20% from the year-ago period, the proceeds raised by these IPOs were flat with the first half of 2018 at just over $32 billion. This reflects that several big tech IPOs took place in Q2. Here are nine of 2019's higher-profile IPOs (in alphabetical order):
|
Company |
Market Cap |
Year Founded / IPO Date |
Profitable? |
Forward P/E |
Projected Average Annual EPS Growth Over Next 5 Years* |
Stock Return Since IPO** / IPO Price |
|---|---|---|---|---|---|---|
| Beyond Meat | $8.9 billion | 2009 / May 2019 | No | 550 | 297% | 494% / $25 |
| CrowdStrike Holdings | $13.2 billion | 2011 / June 2019 | No |
N/A |
25% | 71.5% / $34 |
| Fastly (FSLY -1.06%) | $2.2 billion | 2011 / May 2019 | No | N/A | 30% | 50% / $16 |
| Lyft | $12 billion | 2012 / March 2019 | No | N/A | N/A | (43.3%) / $72 |
| Pinterest (PINS -1.58%) | $14.4 billion | 2010 / April 2019 | No | 2,645 | N/A; 107% next year |
39.2% / $19 |
| ShockWave Medical (SWAV 0.36%) | $839 million | 2009 / March 2019 |
No | N/A | 57% | 76% / $17 |
| Slack Technologies | $12.9 billion | 2009 / June 2019 | No | N/A | N/A | (8.7%) / $26 |
| Uber Technologies | $51.8 billion | 2009 / May 2019 | No | N/A | (167%) | (32.3%) / $45 |
| Zoom Video Communications (ZM -1.39%) | $20.8 billion | 2011 / April 2019 | Yes | N/A | N/A | 112% / $36 |
Data sources: Yahoo! Finance and YCharts. P/E = price-to-earnings ratio. EPS = earnings per share. *Wall Street's projections. **For context, the S&P 500 has returned 20.6% so far in 2019. Data as of Sept. 30, 2019.
Before moving on, here's a brief ditty about each of the companies we're not exploring in this article: Beyond Meat is a Los Angeles area-based producer of plant-based meat substitutes; CrowdStrike is a Silicon Valley-based provider of cloud-based cybersecurity services; Fastly -- another stock that's worth watching -- is a San Francisco-based cloud computing provider operating at the edge, which basically means its services can speed up customers' content delivery systems, streaming, and other products; Lyft, also based in San Francisco, is the world's second-largest ride-hailing company; Slack, yet another company headquartered in the Golden Gate City, is a cloud-based provider of team collaboration tools; and Uber, also based in San Fran, is the world's largest ride-hailing company.
Pinterest is a social media company and makes money from advertising, just as other companies in this category do. Its name is derived from users of its platform virtually "pinning" images and videos of things they find interesting to their boards. The sharing of these visuals allows users to discover new products and projects across categories such as the home, food, health, and so on.
Notably, the San Francisco-based company's founder is its CEO. This is a positive as studies have shown that founder-led U.S. companies tend to significantly outperform in the stock market. Even if you share my general disinterest in social media companies -- both their products and as investments -- Pinterest seems worth watching. Its platform is product-centric -- in a way not unlike Amazon's -- so it's a particularly good alignment with an advertising business model.
In the second quarter, Pinterest's revenue surged 62% year over year to $261.2 million, handily beating the $235.5 million Wall Street was expecting. The company's adjusted, or non-GAAP (generally accepted accounting principles) net loss narrowed 28% from the year-ago period to $24.5 million, or $0.06 per share. This result also surpassed the consensus estimate, which was for a $0.08 loss per share.
Image source: Zoom Video Communications.
Zoom Video
Zoom Video Communications falls into the unified communications-as-a-service (UCaaS) category, which means that its platform brings together a variety of communication modes. These include cloud-based video and audio conferencing, online meetings, group messaging, and more.
As with Pinterest, Zoom is founder led. Moreover, it's the only company in the chart that's currently profitable. That alone should get investors' attention.
In the second quarter, Zoom's revenue rocketed 96% year over year to $145.8 million; GAAP EPS landed at $0.02, up from zero in the year-ago quarter; and adjusted EPS quadrupled to $0.08, which crushed the $0.01 that analysts were expecting.
ShockWave Medical
ShockWave is a pioneer in using intravascular lithotripsy (IVL) -- or sonic waves -- to treat complex calcified cardiovascular disease. Lithotripsy has been used for decades to break up kidney stones, but the Silicon Valley-based company's use of this tech to treat cardiovascular disease -- specifically, to break up calcium deposits in arteries -- is original.
ShockWave currently has two commercial products: M5 IVL catheter and C2 Coronary IVL device. M5 is used to treat peripheral artery disease (PAD) and is marketed in the U.S. and internationally. C2 is used to treat coronary artery disease and is available in Europe. The company is aiming to get C2 approved in the U.S. in the first half of 2021, which would be a big catalyst for growth.
In the second quarter, ShockWave's revenue soared 339% year over year to $10 million. Its net loss widened 5% to $10.6 million, translating into a 93% narrowing of its loss per share -- which came in at $0.38 -- due to the significant increase in the number of shares following the IPO. This result beat the $0.53 loss per share that Wall Street was expecting.
