The number of initial public offerings or IPOs in 2018 rose to nearly 230 which is the highest since 2014 and the third-highest mark over the past ten years. Carlyle Capital Management believe that 2018 was just the beginning of a multi-year IPO boom as the IPO market tends to run in cycles. Historically consecutive years of low IPO volume are followed by multiple consecutive years of high IPO volume. From 2015 to 2017, there were three years of below-average IPO volume. Calendar 2018 broke that trend with 200-plus IPOs therefor history tells us here at Carlyle Capital Management that 2019 and 2020 should perform similarly.
Carlyle Capital Management forsee Calendar 2019 breaking new records in the IPO market as there is a long list of IPOs. The list includes diverse fast-growing companies that promise to make big news headlines when they go public later this year. Carlyle Capital Management feel that many of these IPOs will be extremely successful. The list of companies going public this year includes a group of companies that were born out of the Financial Crisis ten years ago. They are uniquely innovative and more diverse than current public companies. These companies are dynamic and go against the grain employing coordinated economic principles to benefit not just their customers but perhaps their investors as well. The 2019 IPO market could quite possibly be one for the record books and it should also yield some big winners. Keeping that in mind, let’s take a look at a list of six IPOs that could prove to be quite profitable for investors in 2019.
At the top of Carlyle Capital Management list is Uber, the ride-sharing company which has completely changed the private personal transportation industry. Uber is an exciting IPO for investors as they have truly optimized transportation services. Their well established massive driver base will be hard for the competition to replicate and from which multiple valuable business opportunities can be created. Uber is now a household name as before Uber transportation services were performed mainly by taxis. Uber brought the supply of transportation services to the masses enabling anyone with a car to become a taxi. This in itself created a huge new demand for the relatively less expensive personal transportation Uber supplies. They also coordinated that supply so that it would satisfy demand-side expectations. They were able to do so successfully as supply caught up to the new overwhelming demand, price points fell, convenience increased and everyone’s a winner. Uber’s driver base now numbers several million globally. Uber can use that driver base to optimize price and convenience in other transportation-related industries such as delivery and last-mile logistics. Carlyle Capital Management see the potential of all these industry numbers in the hundreds of billions of dollars. The sky is the limit for Uber if they manage to monopolize the future self-driving market. This is what makes Uber’s rumored $120 billion IPO valuation top of our list.
Carlyle Capital Management not that not only has the transportation industry hit the coordinated economy it has also hit the accommodation industry thanks to Airbnb who also are expected to go public in 2019. Accommodation services were provided traditionally by the hotels, motels, hostels and bed and breakfasts. Airbnb democratized supply in that market enabling almost anyone who has an extra room or living space to rent it out for accommodation purposes and supply surged. Airbnb coordinated that supply to satisfy demand-side expectations. As a result, supply caught up to demand prices dropped and convenience rose. Airbnb doesn’t have any big second competitor therefor Airbnb is quite attractive for the foreseeable future. Airbnb is in position to offer other accommodation-related industries like the travel service industry leaving it with upward potentials.
Following the path blazed by Uber Postmates used the same coordinated economy principles and applied them directly to the delivery process. Carlyle Capital Management know that you may want to compare Postmates to food-delivery services including UberEats and GrubHub (NYSE: *GRUB*), however, they are unique and different. Postmates also deliver items from local stores such as groceries, alcohol, and other items–making for a nice complete one-stop-shop. However in the future, they may have to compete with the likes of Amazon (NASDAQ:*AMZN*), but for now same-day delivery isn’t widespread and it isn’t under an hour or so wait time. Carlyle Capital Management analysts agree with many experts that the (prepared) food-delivery market will eventually be huge in the neighborhood of $100 Billion. Postmates is maintaining a steady double-digit market share. This makes the current valuation of Postmates a reasonable ($1.85 billion). Overall Postmates is a solid growth company in a potentially huge growth industry. It’s acknowledged that they have some competition however the valuation reflects those competitive risks and is quite attractive considering the market growth potential.
Snap (NYSE:*SNAP*) was the last big social media app IPO and it didn’t perform up to expectations. However, Carlyle Capital Management expect that the next big social media app IPO Pinterest will have a different outcome. The three reasons for the failure of SNAP are as foll0ws. The user base fell flat, engagement proved difficult to monetize, and margins were weak. Similar problems are not expected to raise their ugly heads where Pinterest is concerned. The platform has about 250 million monthly active users and is growing that base at a fairly consistent 50 million new users per year. Pinterest’s curation focus data indicates that engagement on the platform can be very easily monetized as consumers are already using Pins to influence purchasing behavior. Most importantly Pinterest gross margins are above 45%. Carlyle Capital Management feel that Pinterest seems to be positioned for success on Wall Street. When you realize that user growth is healthy and engagement is easily monetized margins are high. Considering these factors Pinterest stock will likely have a much better start to the market then SNAP did.
Carlyle Capital Management have seen a rapid expansion in the Enterprise social networking or ESN and the pulse of that growth is Slack set to IPO in 2019. As the cloud tech boom grows so has demand for enterprise cloud solutions that are specifically tailored to the needs of intra-business communication and workflow. To directly address those needs ESN is essential as it includes a portfolio of platforms that allow for seamless intra-business communication and workflow sharing. The most popular of those platforms is Slack, which has gone from 365,000 daily active users to 10 million daily active users in just four years. As a result, Slack is now the fastest-growing software-as-a-service (SaaS) company ever. Demand in the ESN space will only continue to grow. Slack has beaten out competition from Facebook (NASDAQ: *FB*) in this space. Carlyle Capital Management have seen that Slack has more than proven its ability to compete in this big growth market positioning the company for lengthy robust growth that bodes well for Slacks stock on Wall Street.
Peter Thiel co-founded PayPal(NASDAQ: PYPL) and was the first major outside investor at Facebook. Palantir his latest venture (which Thiel founded in 2003), is set to go public in 2019. Palantir provides solutions that enable companies of all sizes to make sense of big data. Carlyle Capital Management would like to stress that this is a very important service as Big data is of increasing importance when it comes to enterprise decision making. Where Palantir excels in this field is in providing the best of the best analysis on insights device from Big data. In the long term, the outlook for Palantir is very good. As data will always be increasingly important Palantir services will have a growing demand. Competition is a big concern however the market is projected to be so enormous in the future that it can support multiple players. Consequently, Carlyle Capital Management predict the Palantir IPO should be a successful one on Wall Street.