Shares of videogame platform
soared in their public debut Wednesday, in an indication that the mania that gripped the IPO market late last year shows no sign of abating.
The stock leapt more than 54% above the $45 reference price for its direct listing, an increasingly popular way for companies to go public that sidesteps the traditional IPO process. At its closing price of $69.50, the San Mateo, Calif., company has a market capitalization of roughly $45 billion, a steep jump from the $29.5 billion valuation it secured in a private fundraising just two months ago.
It is the latest marker of a historic boom in initial public offerings, as investors clamor for newly minted shares of fast-growing companies in the midst of a record surge in technology and other stocks. So far this year, nearly $103 billion has been raised in IPOs, including the red-hot market for special-purpose acquisition companies, or SPACs, according to Dealogic. That far outpaces every comparable-period total on record and the full-year tally in all but three years since 1995.
What also makes this surge different from prior ones is that companies are taking a variety of routes to the public market, including by merging with SPACs or through direct listings.
SPACs, empty shells that raise money in an IPO and then look for a private company to merge with, have dominated the headlines this year, raising more than $75 billion, or roughly 74% of overall stock issuance. Yet even stripping out that amount, more money has been raised so far this year for traditional IPOs—roughly $26.5 billion—than in any other comparable period on record, including at the height of the dot-com boom.
While there has been a recent selloff in shares of technology firms and SPACs, many of the hardest hit among them surged Tuesday in a sign that the appetite for risk that is fueling new issues remains voracious.
Indeed, the 2021 IPO party is just getting started, bankers say.
South Korean e-commerce giant Coupang Inc. is expected on Thursday to follow Roblox with a traditional IPO that is set to be the largest this year by dollars raised and valuation, and the biggest for a foreign company since
Alibaba Group Holding Ltd.
’s blockbuster 2014 debut.
The shares priced at $35 apiece, above an already-raised range of $32 to $34, according to people familiar with the deal. That means Coupang’s IPO will raise more than $4 billion and its valuation on a fully diluted basis including proceeds is set to be nearly $63 billion.
Demand has been so ravenous that the underwriting team has expressed concerns that the shares will pop as dramatically on the first day of trading as stock in
did in their respective debuts in December, according to people familiar with the matter.
Fears over such a pop, which effectively means the company and other sellers in the offering leave big money on the table, led Roblox to delay a planned December IPO and opt instead for a direct listing, in which no money is raised.
The current boom times will invariably come to an end—it is just a matter of when and why—and some market participants say that helps explain the rush to the public markets now.
Bankers and other IPO advisers say both established and still-nascent companies are accelerating their timetables for moving into the public markets. In two examples, WeWork and Shutterfly Inc. are in talks to go public through SPACs, The Wall Street Journal has reported.
All the exuberance is helping mint fortunes. The rush of public investors into Roblox and Coupang means giant returns for their early investors.
Roblox raised $520 million from Altimeter Capital and Dragoneer Investment Group, which paid $45 a share in the January funding round. That valuation was already a dizzying jump from the $4 billion at which the company raised money in early 2020, from a group including venture-capital firm Andreessen Horowitz.
A group of investors including Japan’s
SoftBank Group Corp.
, hedge fund Maverick Capital Ltd. and venture-capital firm Greenoaks Capital Partners LLC are poised to book big gains on the Coupang IPO. Greenoaks, whose founder Neil Mehta serves on the board, invested in Coupang in 2010 when it was valued at roughly $10 million and now owns about 17% of the company. Maverick bought in at a valuation of less than $100 million in 2011, and now it owns roughly 6% of Coupang.
Since 2015, SoftBank has invested $2.7 billion in Coupang in exchange for roughly 37% of the company. At a $60 billion valuation, SoftBank and its Vision Fund would generate a profit of roughly $19 billion.
SoftBank also holds more than one-third of Compass Inc.’s stock. The real-estate brokerage firm is expected to debut in the coming weeks at a valuation of around $20 billion, according to people familiar with the deal, more than triple the $6.4 billion valuation at which it last raised capital.
Write to Maureen Farrell at email@example.com
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