AFP, New York :
The so-called “unicorns” that lured big investments and took Silicon Valley by storm are facing a chillier environment as they turn to Wall Street for fresh capital.
The startups earned the unicorn moniker for quickly reaching valuations of more than a billion dollars without hitting public markets, considered a rare feat until a few years ago.
But some of the most prominent unicorns have stumbled on Wall Street, with investors cautious about their profit potential as well as an uncertain economic outlook.
Uber, which was the biggest of the unicorns and had hoped for a valuation of $100 billion, is worth around half that now, and its shares have skidded some 30 percent since its initial public offering (IPO) in May.
Rideshare rival Lyft has fared even worse, with a 40 percent drop since its IPO early this year.
WeWork parent We Company, another massive unicorn valued at some $47 billion based on private funding rounds, shelved plans for its IPO this month and replaced its top executive Adam Neumann after a series of missteps and governance questions surrounding the fast-growing office-sharing startup that spooked investors.
Nathan Thooft, a portfolio manager at Manulife Asset Management, said some of the big unicorns may have waited too long to list on Wall Street.
“Some of these big names like Uber have had their fastest growth in the past,” Thooft said. “They had massive growth in the pre-IPO years. They’re coming to the market at a time where their growth is actually slowing.”
The chilly reception for the biggest startups has created a tough environment for other privately funded startups.
Connected fitness equipment maker Peloton, seeking to ride the unicorn wave, lost 11 percent as it began trade on Wall Street in the past week.
SmileDirectClub, a teledentistry startup offering orthodontics, has also seen big losses since its IPO earlier this month.
Amid this unwelcoming environment, Airbnb, one of the biggest unicorns still on the sidelines, recently said it would hold off on its IPO until 2020. The Hollywood agency Endeavor, another startup with a multibillion-dollar valuation, postponed its planned IPO at the last minute.
The so-called “unicorns” that lured big investments and took Silicon Valley by storm are facing a chillier environment as they turn to Wall Street for fresh capital.
The startups earned the unicorn moniker for quickly reaching valuations of more than a billion dollars without hitting public markets, considered a rare feat until a few years ago.
But some of the most prominent unicorns have stumbled on Wall Street, with investors cautious about their profit potential as well as an uncertain economic outlook.
Uber, which was the biggest of the unicorns and had hoped for a valuation of $100 billion, is worth around half that now, and its shares have skidded some 30 percent since its initial public offering (IPO) in May.
Rideshare rival Lyft has fared even worse, with a 40 percent drop since its IPO early this year.
WeWork parent We Company, another massive unicorn valued at some $47 billion based on private funding rounds, shelved plans for its IPO this month and replaced its top executive Adam Neumann after a series of missteps and governance questions surrounding the fast-growing office-sharing startup that spooked investors.
Nathan Thooft, a portfolio manager at Manulife Asset Management, said some of the big unicorns may have waited too long to list on Wall Street.
“Some of these big names like Uber have had their fastest growth in the past,” Thooft said. “They had massive growth in the pre-IPO years. They’re coming to the market at a time where their growth is actually slowing.”
The chilly reception for the biggest startups has created a tough environment for other privately funded startups.
Connected fitness equipment maker Peloton, seeking to ride the unicorn wave, lost 11 percent as it began trade on Wall Street in the past week.
SmileDirectClub, a teledentistry startup offering orthodontics, has also seen big losses since its IPO earlier this month.
Amid this unwelcoming environment, Airbnb, one of the biggest unicorns still on the sidelines, recently said it would hold off on its IPO until 2020. The Hollywood agency Endeavor, another startup with a multibillion-dollar valuation, postponed its planned IPO at the last minute.
