A slew of new unicorns is charging towards the ripe initial public offering market. This comes as the technology sector has fared better than most during the COVID-19 pandemic.
Copenhagen gaming company Unity, project management software provider Asana, data-analytics company Sumo Logic, data-warehousing firm Snowflake, and data-analytics powerhouse Palantir Technologies are leading the way. Airbnb has also filed its IPO registration.
Notably, Palantir plans to go public as early as September and is close to revealing its financials. However, its books have been described by analysts as "lackluster." The company serves a number of government intelligence and military agencies. Founded in 2003, Palantir has yet to turn a profit and has accumulated an earnings deficit of nearly $4 billion. In 2019 alone, the company lost almost $600 million.
Due to the nature of Palantir’s work, it has garnered criticism for its reliance on the political climate. In its filing, the company disclosed that its business might be impacted by “shifts in the political environment and changes in the government and agency leadership positions in connection with the 2020 presidential election.” With the potential for a new administration as soon as next year, Palantir could find government contracts difficult to procure, making its impending IPO a house of cards.
This could inspire investors to exercise prudence by the time September rolls around.
Hindsight is 20/20 and Rackspace’s debut serves as an important warning. At the beginning of the month, Rackspace’s shares fell 22% below its $21 debut price, giving it the title of worst-performing technology IPO of the year. Investors could be concerned about Palantir.
Meanwhile, analysts are citing Snowflake and Unity as the IPOs to watch.
Snowflake is a data-warehousing company known as a best-in-class cloud-software market leader with an open-ended opportunity for growth. In its latest quarter, ending in July, the San Mateo-based company’s sales increased by 121% compared with the period a year earlier, a notably higher growth rate than other public cloud companies.
On the other hand, Unity makes a software platform for building video games and was recently valued around $6 billion.