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Guess Who Got Rich off Uber’s Train-Wreck I.P.O.? – Vanity Fair

Roger McNamee, the prominent Silicon Valley investor, has dubbed the initial public offering of Uber—the most widely anticipated I.P.O. of the decade—a “train wreck,” while others have noted that investors who bought Uber stock at its I.P.O. price of $45 a share lost more money—$655 million—at the end of the first day of trading than any other I.P.O. in U.S. history.

But, as usual, guess who made a boatload of money at the expense of Uber’s I.P.O. investors? That’s right: the Wall Street underwriters, led by Morgan Stanley, Goldman Sachs, and Bank of America. Wall Street always finds a way to make money, of course, and the Uber I.P.O. was no exception.

First came the payoff for underwriting the 180 million shares the company sold to the underwriters at $45 per share. That raised $8.1 billion for Uber, of which, according to the final I.P.O. prospectus, Uber agreed to pay the Wall Street underwriters $106.2 million. Nearly 70 percent of this $106 million went to Morgan Stanley (as lead underwriter, the firm scooped up around $40 million of fees), Goldman Sachs hoovered up around $20 million in fees, and Bank of America made $10 million. In fairness to this trio of bankers, they probably have been trying to feed at the Uber trough for years and years without getting a payoff. And even this fee bonanza isn’t exactly robust by I.P.O. fee standards. Smaller I.P.O.s can earn underwriters 7 percent of the proceeds; but in this case Uber screwed down the underwriters to a 1.3 percent fee, albeit on one of the largest I.P.O.s in history.

Wall Street views I.P.O.s as a gigantic foot in the door to more business down the road. “In the internal underwriting materials, bankers show the I.P.O. as being a loss leader,” says one former Wall Street banker. “Just in terms of the amount of time and the credit that you have to offer to get it and all that stuff. It’s just not a ton of money.”

But, perversely, Wall Street managed to really hit the jackpot—to the tune of as much as another $200 million or so—in the days following the Uber I.P.O. as the stock cratered. Here’s why: as part of the I.P.O., Uber granted the underwriters another 15 percent of the offering, or 27 million shares, at the I.P.O. price of $45 per share. (On Wall Street, this option is referred to as the “greenshoe,” named after the company where it was first done generations ago.)

Since there was a lot of demand for the Uber I.P.O.—generated in large part by the Wall Street hype machine—not only had Morgan Stanley and Goldman Sachs sold the 180 million Uber shares they bought from the company, they also had pre-sold the 27 million additional “greenshoe” shares at $45 a share to the I.P.O. investors. What’s more, the investors who bought those 27 million additional shares at $45 each had already paid for them—meaning that the underwriters were sitting on a cash pile of $1.215 billion. This resulted in the underwriters being “short” the 27 million shares. In other words, they had the investors’ money but they still had yet to deliver them the Uber shares they had bought and paid for.

Where to find these 27 million shares that needed to be delivered? Morgan Stanley could have exercised its option from Uber and bought the shares from Uber at $45 per share and then delivered them to the investors who had bought them for $45 per share. Uber, no doubt, would have loved to have sold Morgan Stanley another 27 million shares at $45 per share, generating another $1.2 billion in proceeds.

But, wouldn’t you know it, there was another place where Morgan Stanley could turn to deliver those shares: the market. With the Uber I.P.O. a bust—trading as low as around $36 per share on May 13—to satisfy its obligation to deliver 27 million Uber shares, all Morgan Stanley had to do, and likely did (Morgan Stanley isn’t commenting), is go into the market and buy 27 million shares of Uber, at say $37 per share, at a total cost of $1 billion. Those shares would then be sold, as promised, to investors, for $45 per share.

That bit of Wall Street alchemy, assuming it happened that way, would have netted Morgan Stanley a cool $215 million. “If the stock’s down a couple of bucks, no one sort of really cares,” the former banker tells me. “When the stock is down this much, there is massive opportunity to make enormous profit and that’s a trade secret on Wall Street.”

So Wall Street wins big, as do many of the original Uber venture-capital investors, such as Benchmark and First Round Capital. Who loses in this situation? Anyone who bought in the I.P.O., of course. And that would include both retail and institutional investors. Other losers are the late-stage investors that bought Uber stake at valuations in excess of the $71.4 billion that Uber is trading at these days. Another unexpected loser is PayPal, which for unexplained reasons bought $500 million worth of the Uber I.P.O. at $45 per share. When the Uber stock was trading at around $36 per share, PayPal was sitting on a cool loss of around $100 million. Now that Uber has recovered to around $43 per share, PayPal’s loss has been trimmed to around $22 million. Ouch.

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WeWork lost $1.9 billion last year, but it’s considering going public

The We Company, parent company of WeWork, is the latest in a string of richly valued start-ups set to go public this year. But though it was recently valued at $47 billion, it’s far from turning a profit. Instead, it’s hemorrhaging cash.

WeWork lost $1.9 billion last year on $1.8 billion in revenue, as it focused on rapid growth. Things improved in the first quarter of 2019, but only slightly: The company says it lost $264 million on $728 million in revenue during the quarter.

The company’s core business revolves around renting out co-working spaces to everyone from startups and freelancers to large enterprises. Now, WeWork says it’s in 425 locations, and has over 400,000 members, up from 186,000 in 2017. the company’s CFO told CNBC that investors should look at WeWork’s losses as “investments” that will lead to more cash flow.

However, Lyft and Uber‘s recent IPO stumbles could bode poorly for WeWork’s chances of a successful debut, as investors seem wary about taking a bet on companies that lack a clear path to profitability.

Source: IPOs
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Avantor Shares Debut About 5.1% Pct Above IPO Price

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The Banks That Ran Uber’s IPO Feared This Would Happen – New York Magazine

Photo: Michael Nagle/Bloomberg via Getty Images

Matt Levine, among others, has been writing about the extraordinary measures that the investment banks running Uber’s initial public offering took, in vain, to stop the stock from tumbling in its first few days on the stock market.

First, there was a not-extraordinary measure: the greenshoe, typical in IPOs, where for every 100 shares the going-public company sells to the underwriting banks running the IPO, the banks turn around and sell 115 shares to investors. Because the banks sell more shares than they buy, they end up with a short position in the company they’ve just taken public, which is a little weird. But company insiders give the banks an option to buy the additional 15 shares later, at a fixed price slightly below the IPO price, which protects the underwriting banks from losing money on their short position, which helps avoid a perverse incentive for the banks to be afraid that their client’s stock will go up.

In this instance, Uber went public at $45 per share. The underwriting banks sold 207 million shares to the public, but they had only bought 180 million shares from Uber, so Morgan Stanley was going to have to go out sooner or later and buy up 27 million additional shares to cover the short position. They had an option to buy those shares from Travis Kalanick and various other insiders for $44.41 each. But, you will notice, Uber stock closed Thursday at $42.67, and on Monday, it traded as low as $36.08.

Why would the underwriters buy for $44.41 when they could buy for $42.67 or even $36.08? Of course, they haven’t been buying from Travis; they’ve been out buying on the open market, making a nice tidy profit — more than they would have made if the IPO had gone like Uber wanted, with the stock price rising after the offering — since, remember, the shares the banks are buying are ones they already sold for $45. But, rather than being a nasty way to make money at Uber’s expense, this is framed as just another part of the IPO service — by going out and buying so many shares, the banks are working diligently to prop up the stock price, which would otherwise be even lower.

Now, the extraordinary part: CNBC reports the banks were worried Uber’s stock would do exactly what it did after the offering (puke) and they weren’t sure the flexibility to buy 27 million shares would be enough to keep the price up. So actually they sold even more than 207 million shares of Uber in the initial offering, exceeding the sum of the 180 million shares they had bought from the company and the 27 million shares they had the option to buy at a fixed price. The excess over 207 million that the banks sold created what’s called a naked short position: Not only did the banks stand to make money on this position if Uber’s stock fell, they were going to lose money if the stock went up.

A lot of people have been observing that this doesn’t say great things about what the banks thought about their own IPO: Not only did they think they were going to need a lot of ammunition to prop the price up, they apparently weren’t concerned the stock would trade above the IPO price, which is usually what you want and expect to happen after an IPO.

But even aside from the optics, it seems to me … isn’t creating a naked short position so you can buy more stock later kind of like turning down your thermostat so you can turn it back up again? That’s not going to make your house warmer. Why would selling a bunch of shares so you can buy them back cause a stock’s price to be higher? Indeed, ordinarily, selling a stock short is not just an expression of an expectation that a stock’s price will fall but an action that, done in large enough volume, can cause a stock’s price to fall.

I realize selling short in an IPO is a very different proposition than selling on the open market — the banks had already named a set price at which to sell the stock, and they knew how much demand there was to sell at that price, and so they presumably knew they didn’t have to cut the IPO price in order to create the short position. But that just governs the price at IPO. Once the stock is trading, having sold additional shares to create the short position means there are more shareholders out there with shares they are able to sell. Remember, most of the shares of the company are owned by insiders who already had pieces of Uber, but they’re not allowed to sell until 180 days after the IPO. That’s normally one of the factors that’s supposed to restrict downward post-IPO pressure on the stock price.

If you sell additional shares, you also make the IPO less oversubscribed — meaning, you reduce the extent to which there were investors who didn’t get as many shares as they wanted in the IPO and who might be inclined to buy more now that the stock is publicly traded. You, the bank, have more room to buy shares, but you’ve actually reduced the extent to which there are other market participants eager to buy.

So, I am skeptical that having a big short position available to cover is an effective way to keep a stock from falling, but what do I know? Uber stock, while still below the $45 offering price, has rebounded strongly over the last three days, rising out of “disaster” territory into “disappointment” territory. But in the long run, if Uber wants to keep its share price up, it will need something much more elusive than a good underwriting strategy: profits.

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How the Promise of a $120 Billion Uber I.P.O. Evaporated – The New York Times

Last September, Uber’s top executives were pitched by some of Wall Street’s biggest banks, Morgan Stanley and Goldman Sachs.

The bankers’ presentations calculated Uber’s valuation almost identically, hovering around one particular number: $120 billion.

That was the figure the bankers said they could convince investors Uber was worth when it listed its shares on the stock market, according to three people with knowledge of the talks. Uber’s chief executive, Dara Khosrowshahi, and chief financial officer, Nelson Chai, listened and discussed the presentations, these people said. Then they hired Morgan Stanley as lead underwriter, along with Goldman Sachs and others, to take the company public — and to effectively make the $120 billion valuation a reality.

Nine months later, Uber is worth about half that figure. The ride-hailing firm went public last week at $45 a share and has since dropped to around $41, pegging Uber’s market capitalization at $69 billion — and officially crowning it as the stock market debut that lost more in dollar terms than any other American initial public offering since 1975.

How Uber’s offering turned into what some are now openly calling a “train wreck” began with the $120 billion number that the bankers floated. The figure leaked last year, whipping up a frenzy over how Uber could soon become the biggest American company to list on an American stock exchange — larger even than Facebook, which went public in 2012 at a whopping $104 billion valuation.

But for Mr. Khosrowshahi and Mr. Chai, the $120 billion number turned Uber’s I.P.O. process into an exercise in managing expectations. Some large investors who already owned Uber shares at cheaper prices pushed back against buying more of the stock at such a lofty number, said people familiar with the matter. Their appetite for Uber was dampened further by the company’s deep losses and slowing growth in regions like Latin America. And Uber had to contend with unforeseen factors, including fraying trade talks with China that spooked the stock market in the same week that the company decided to go public.

Image
Uber signage decorated the exterior of the New York Stock Market last week.CreditJeenah Moon for The New York Times

The result has created a host of pointed questions for all involved in Uber’s I.P.O., from Mr. Khosrowshahi and Mr. Chai to the underwriters at Morgan Stanley, Goldman Sachs and Bank of America. While Uber raised $8.1 billion from its offering and reaped billions of dollars in returns for its early investors and founders, what should have been a climactic moment for a transportation colossus instead became an embarrassment.

The extent of the fallout may not be clear for a while, and it is too early to judge how Uber will ultimately fare in the public markets. But as many other tech-related companies aim to go public this year, including the food-delivery company Postmates and the real-estate firm WeWork, they will have to contend with whether Uber has squelched what had been a red-hot I.P.O. market.

“The $69 billion market cap Uber had when the market closed today is a new reality,” said Shawn Carolan, partner at Menlo Ventures, which invested early in the company. But he added that Uber’s executives now had “the opportunity to show us what they can do.”

This account of Uber’s I.P.O. was based on interviews with a dozen people involved in or briefed on the process. Many asked to remain anonymous because they were not authorized to speak publicly. Representatives from Uber, Morgan Stanley and Goldman Sachs declined to comment.

For years, Uber was an investor darling. As a privately held company, it gorged on capital from venture capital firms like Benchmark and GV, mutual fund firms like Fidelity Investments, and companies like SoftBank. Its private valuation shot up from $60 million in 2011 to $76 billion by August.

Mr. Khosrowshahi, who became chief executive in late 2017, was recruited partly to steer Uber through a successful I.P.O. Uber’s board agreed to pay him $45 million in cash and restricted stock — and set an unusually specific valuation target for an additional bonus. In a provision in Mr. Khosrowshahi’s compensation agreement, which was revealed in the company’s I.P.O. prospectus, the board said that if Uber was valued in the public market at $120 billion or more for at least three months in the next five years, he would receive a payout of $80 million to $100 million.

Image

SoftBank, the Japanese company run by Masayoshi Son, helped fund Uber’s competitors in Latin America.CreditKiyoshi Ota/Bloomberg

That provision set something of a goal for Uber, which the investment bankers who were hired to take the company public also gravitated toward. Within weeks of the banks’ presentations on the $120 billion, that number leaked, leading to giddy speculation in Silicon Valley and on Wall Street that Uber’s offering could usher in a golden era of wealth.

By December, Uber’s I.P.O. team was set. At the company, Mr. Chai, a former chief financial officer at Merrill Lynch, was charged with leading the public offering. At Morgan Stanley, Michael Grimes, the firm’s star tech banker, was the point person, assisted by Kate Claassen, head of internet banking. Goldman Sachs’s team was led by Gregg Lemkau, Kim Posnett and David Ludwig. Bank of America’s was headed by Neil Kell and Ric Spencer.

Almost immediately, the setbacks began, starting with Uber’s business. Its once-meteoric growth rate was slowing as its geographic expansion appeared to be running out of room and as competitors continued springing up across the world.

One growth headache was connected to Uber’s biggest investor, SoftBank. The Japanese company, which has a $100 billion Vision Fund that it uses to invest in all manner of companies, has poured capital into technology start-ups including Didi Chuxing, China’s biggest ride-hailing company, and 99, a transportation start-up in Latin America.

In January 2018, Didi agreed to acquire 99. Both SoftBank and Didi also started directing funds toward pushing deeper into Latin America; SoftBank eventually created a $5 billion fund earmarked specifically for investing in Latin American companies.

For Uber, the timing was terrible. The region was one of its most promising growth areas, and its competition had ramped up. By this February, the damage in Latin America had begun showing up in Uber’s results in the form of slowing growth.

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In March, Lyft, the ride-hailing rival run by John Zimmer, left, and Logan Green, went public and dropped below its offering price on its second day of trading.CreditAlex Welsh for The New York Times

Uber’s food delivery business, UberEats, was under attack as well. SoftBank had sunk hundreds of millions of dollars into DoorDash, a food delivery company in the United States. More recently, SoftBank invested $1 billion into Rappi, a food delivery company in Latin America. Uber had to spend more to battle those rivals.

SoftBank and Didi declined to comment. (Uber and Didi own shares in each other as well.)

The slowing growth led to lukewarm investor demand for Uber’s shares, according to two of the people involved in the matter. Some investors argued that Uber needed to price its offering lower, these people said.

Some investors were also resisting because they had earlier invested in Uber at cheaper prices. Since its founding in 2009, Uber has taken in more than $10 billion from mutual fund firms, private equity investors and others, meaning that its stock was already widely held among those institutions that traditionally buy shares in an I.P.O. So the I.P.O. essentially became an exercise in getting existing investors to purchase more shares — a tough sell, especially at a higher price.

In March, another problem cropped up. Uber’s rival in North America, Lyft, went public and promptly fell below its offering price on its second day of trading. Investors appeared skeptical about whether Lyft could make money, setting a troublesome precedent for Uber.

By the time Uber made its I.P.O. prospectus available in April, it had already told some existing investors that its offering could value it at up to $100 billion — down from the initial $120 billion.

Inside Uber, two people familiar with the deliberations said the company’s board was also not fully briefed on how Mr. Khosrowshahi and other executives planned to pitch the firm to investors in what is known as a “roadshow.” Only a smaller group of board members, who were part of a pricing committee — including Mr. Khosrowshahi, Ronald Sugar, who is also Uber’s chairman, and David Trujillo of TPG — focused on the I.P.O., these people said.

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A screen at the New York Stock Exchange displayed Uber’s logo and price after the closing bell on the first day of trading.CreditBrendan McDermid/Reuters

Another person close to the board said that all board members were invited to attend pricing discussions and I.P.O. event planning, and that all materials from the pricing committee were made available. Some members were more active than others, the person said.

In late April, Uber proposed a price range of $44 to $50 a share for its offering, putting its valuation at $80 billion to $91 billion, below the $100 billion it had floated just a few weeks earlier.

The company soon hit other obstacles. President Trump tweeted this month that he wanted to raise tariffs on $200 billion of Chinese goods, unsettling global stock markets. The day before Uber priced its I.P.O., Lyft reported a $1.14 billion loss for its first quarter, renewing questions about the health of ride-hailing businesses.

Uber’s executives, board and bankers discussed the final pricing of the stock sale on May 9. Several board members pushed for a price at the higher end of the $44- to $50-a-share range, said the people briefed on the situation.

But Morgan Stanley, Goldman Sachs and others agreed that it needed to be lower, they said. The list of orders from potential investors, known in Wall Street jargon as the “book,” showed that the most desirable investors — the big asset managers who were most likely to hold on to the shares, even in tough times — were interested only in the lower price.

The final price: $45 a share.

That evening, Mr. Khosrowshahi and his management team gathered in Manhattan at Daniel, a Michelin-star restaurant a few blocks east of Central Park, at a “pricing dinner” hosted by Morgan Stanley. The mood was upbeat, according to two people familiar with the evening.

But the next morning, that mood had changed. Uber executives arrived at the New York Stock Exchange, where the company was listing its shares. Before the first trade, monitors that lined the exchange floor displayed how Uber’s stock was likely to fall — flashing up $45, $44, before finally opening at $42. The chatter quieted.

The rest of the day was little better. Uber’s stock never rose close to its $45 offering price. As the so-called stabilization agent, charged with helping trading in Uber stock, Morgan Stanley made some moves to support the shares, according to people with knowledge of the matter. Yet by the end of the day, while the S&P 500 index closed up, Uber’s stock remained down.

On Wednesday, Uber closed at $41.29, more than 8 percent below its offering price.

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Lyft accused of misleading investors, inflating IPO share price – Fox Business

Ride-sharing company Lyft, which made its public trading debut in March, is being sued by investors over claims that it made misleading statements about a handful of issues affecting its business.

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The lawsuit, filed in San Francisco federal court on Friday, claims the company deceived investors about its ridesharing position, bicycle safety issues and labor matters, as first reported by Reuters. Those misleading statements allegedly inflated the share price – and investors are saying they lost money when the stock fell.

MORE FROM FOXBUSINESS.COM…

Not only is the company being sued for securities fraud, so are some of its officers and directors – as well as the underwriters of the IPO. It is a class action suit.

A spokesperson for the company did not immediately return FOX Business’ request for comment.

Lyft made its public trading debut on the Nasdaq in late-March, when shares surged above the $72 per share they had been priced at. The stock began trading at more than $87 per share, 20 percent over what it had been priced at.

As of Friday, shares were trading shy of $54. They are down more than 4 percent over the past month.

Ticker Security Last Change %Chg
LYFT LYFT INC. 53.79 -1.81 -3.26%

Meanwhile, shares of rival Uber began trading last week, at $45 per share. Shares have since dropped to around $41 per share. According to The New York Times, it made the stock market debut that lost more in dollar terms than any other IPO since 1975.

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The Luckin Coffee IPO Is Here. The Stock Price, Market Cap, and More to Know – Barron’s


Photograph by Fred Dufour/AFP/Getty Images

Luckin Coffee
,
China’s second largest coffee chain, went public Friday. The stock quickly soared above its IPO price.

The Xiamen-based company had priced its initial public offering at $17 per share early Friday. Luckin Coffee stock began trading on the Nasdaq on Friday under the ticker LK.

Luckin, which is less than two years old and is often referred to as the “Starbucks of China,” raised about $571.2 million through the IPO. The listing was one of the biggest by a mainland Chinese company in the U.S. this year.

Here’s everything you need to know.

What does Luckin Coffee do?

Luckin is challenging Starbucks’ long-held dominance of China’s freshly-brewed coffee market. Since it was founded in 2017, the company has been expanding at a rapid speed. As of March, Luckin had about 2,370 stores in 28 Chinese cities. The company plans to open 2,500 more new locations by the end of 2019, and to surpass
Starbucks

(SBUX) as the largest coffee network in China by number of stores.

“China’s coffee market is highly underpenetrated,” Luckin said in its IPO filing. “Inconsistent qualities, high prices and inconvenience have hampered the growth of the freshly brewed coffee market in China. We believe that our model has successfully driven the mass market coffee consumption in China by addressing these pain points.”

How much does Luckin Coffee stock cost?

Hours before it was set to begin trading, Luckin Coffee priced its IPO at $17 per share. That was at the top of the $15-$17 range it had disclosed previously.

Luckin Coffee stock quickly surged 47% above the IPO price of $17. The stock opened at $25 per share. It rose almost as high as $26 per share before closing at $20.38 per share, for a one-day gain of 19.9% over the IPO price.

Like other IPOs, the initial offering price of $17 is what institutional investors pay for the stock. Individual investors had to pay the opening price.

What is Luckin Coffee’s market capitalization?

Luckin has raised $550 million from investors that include the U.S. private equity group
BlackRock

and Singapore’s sovereign wealth fund GIC, according to Crunchbase.

Luckin was valued at $2.9 billion after its last round of funding in April.

Read our recent cover story: 7 Dividend Stocks for Volatile Times Ahead

Luckin is offering 33 million American Depository Shares in its IPO, each of which represents eight of the company’s Class A ordinary shares. Luckin raised $571.2 million through the IPO. The amount could go up to $650.8 million if the underwriters exercise their option to purchase additional ADS.

Its valuation could rise above $4 billion after the IPO.

The company plans to use the proceeds for store network expansion, customer acquisition, research and development, sales and marketing, as well as investment in technology infrastructure.

How does Luckin Coffee compare to Starbucks?

During its two decades in China, Starbucks has been targeting the country’s upper middle class with trendy stores and higher prices. Drinking coffee was viewed as a symbol of Western lifestyle and higher social status.

Luckin is taking a different approach, targeting white-collar millennials as its major consumers. More than 90% of Luckin’s stores are smaller “pick-up” stores located near office buildings or university campuses. They have limited seating, which allows the company to “stay close to our target customers and expand rapidly with low rental and decoration costs,” Luckin said in its fillings.

Luckin’s coffee is cheaper than Starbucks. The company is known for heavy promotional discounts to attract new customers and boost sales. Luckin’s list prices are about 25% lower than Starbucks’, according to Bernstein analyst Sara Senatore, but the effective price after discounts could be less than half of what Starbucks charges.

Read our recent cover story: Why Investors Should be Wary as the Unicorns Finally Seek IPOs

Technology and convenience is also key to Luckin’s growth. Most customers make their orders using Luckin’s mobile app, while a typical Starbucks customer still orders from a cashier in store.

How is Luckin performing financially?

Luckin sold more than 90 million cups in 2018 (not just of coffee) and reported revenue of $125.3 million. But aggressive spending on new stores, marketing, and customer acquisition has weighed on margins: Luckin had an operating loss of $238.1 million last year, for a negative margin of 193%. Starbucks, by comparison, had a positive operating margin of 15.7%.

Luckin’s financial situation has improved this year, however. In the first quarter of 2019, the company saw $71.3 million in revenue with a $78.5 million operating loss, a negative margin of 110%.

Steep losses aren’t uncommon during the expanding phase of new start-ups like Luckin. The key questions are whether the company can maintain its growth speed and transaction volume once the promotional discounts are taken away, and whether it can achieve profitability in the foreseeable future.

What are the risks of Luckin Coffee stock?

Luckin’s main competitors are other coffee shops such as Starbucks and British brand Costa Coffee. But the company said it also expects to compete against convenience stores and other food and beverage operators in the future.
McDonald’s

McCafe, for example, also launched its delivery service last year in Shanghai. Luckin’s coffee recipes are not proprietary, which means it has to rely on marketing and pricing strategies to retain customers.

It won’t be easy.

“Our competitors may have more financial, technical, marketing and other resources than we do and may be more experienced and able to devote greater resources to the development, promotion and support of their business,” Luckin said in its IPO prospectus.

Starbucks plans to open almost 600 stores in China annually and reach 6,000 sites in the country by 2023. Starbucks also announced a deal last August with Ele.me, the food-delivery platform owned by
Alibaba
,
to jump-start its own delivery ambitions in China.

Write to Evie Liu at evie.liu@barrons.com

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Fastly pops in public offering showing that there’s still money for tech IPOs – TechCrunch

Shares of Fastly, the service that’s used by websites to ensure that they can load faster, have popped in its first hours of trading on the New York Stock Exchange.

The company, which priced its public offering at around $16 — the top of the estimated range for its public offering — have risen more than 50% since their debut on public markets to trade at $25.01.

It’s a sharp contrast to the public offering last week from Uber, which is only just now scratching back to its initial offering price after a week of trading underwater, and an indicator that there’s still some open space in the IPO window for companies to raise money on public markets, despite ongoing uncertainties stemming from the trade war with China.

Compared with other recent public offerings, Fastly’s balance sheet looks pretty okay. Its losses are narrowing (both on an absolute and per-share basis according to its public filing), but the company is paying more for its revenue.

San Francisco-based Fastly competes with companies that include Akamai, Amazon, Cisco and Verizon, providing data centers and a content-distribution service to deliver videos from companies like The New York Times, Ticketmaster, New Relic and Spotify.

Last year, the company reported revenues of $144.6 million and a net loss of $30.9 million, up from $104.9 million in revenue and $32.5 million in losses in the year ago period. Revenue was up more than 38% and losses narrowed by 5% over the course of the year.

The outcome is a nice win for Fastly investors, including August Capital, Iconiq Strategic Partners, O’Reilly AlphaTech Ventures and Amplify Partners, which backed the company with $219 million in funding over the eight years since Artur Bergman founded the business in 2011.

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Under the hood on Zoom’s IPO, with founder and CEO Eric Yuan – TechCrunch

Extra Crunch offers members the opportunity to tune into conference calls led and moderated by the TechCrunch writers you read every day. This week, TechCrunch’s Kate Clark sat down with Eric Yuan, the founder and CEO of video communications startup Zoom, to go behind the curtain on the company’s recent IPO process and its path to the public markets.

Since hitting the trading desks just a few weeks ago, Zoom stock is up over 30%. But the Zoom’s path to becoming a Silicon Valley and Wall Street darling was anything but easy. Eric tells Kate how the company’s early focus on profitability, which is now helping drive the stock’s strong performance out of the gate, actually made it difficult to get VC money early on, and the company’s consistent focus on user experience led to organic growth across different customer bases.

Eric: I experienced the year 2000 dot com crash and the 2008 financial crisis, and it almost wiped out the company. I only got seed money from my friends, and also one or two VCs like AME Cloud Ventures and Qualcomm Ventures.

nd all other institutional VCs had no interest to invest in us. I was very paranoid and always thought “wow, we are not going to survive next week because we cannot raise the capital. And on the way, I thought we have to look into our own destiny. We wanted to be cash flow positive. We wanted to be profitable.

nd so by doing that, people thought I wasn’t as wise, because we’d probably be sacrificing growth, right? And a lot of other companies, they did very well and were not profitable because they focused on growth. And in the future they could be very, very profitable.

Eric and Kate also dive deeper into Zoom’s founding and Eric’s initial decision to leave WebEx to work on a better video communication solution. Eric also offers his take on what the future of video conferencing may look like in the next five to 10 years and gives advice to founders looking to build the next great company.

For access to the full transcription and the call audio, and for the opportunity to participate in future conference calls, become a member of Extra Crunch. Learn more and try it for free. 

Kate Clark: Well thanks for joining us Eric.

Eric Yuan: No problem, no problem.

Kate: Super excited to chat about Zoom’s historic IPO. Before we jump into questions, I’m just going to review some of the key events leading up to the IPO, just to give some context to any of the listeners on the call.

Source:

“ipo” – Google News


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