A few star performers in the US IPO market

June 25, 2019 16:53
Online pet supplies retailer Chewy is one of the recent success stories in the US IPO market. Photo: Bloomberg

Both Uber and Lyft are well below their IPO prices, with their slide stoking concerns that the tech stock boom is coming to an end.

But the fact is there have been quite a few star performers among the newly-listed firms in that space, including names such as Zoom, Chewy and Fiverr.

Online pet supplies retailer Chewy was founded eight years ago, and it’s already the biggest player in the US. The firm controls 55 percent of online pet supplies market, with sales revenue hitting US$3.5 billon last year.

The stock, which was priced at US$22, surged to more than US$37 at one point this month.

Chewy is one of the very few firms that can beat Amazon in a specific area.

Amazon has been aggressively expanding its pet supplies presence in recent years, and introduced store-brand pet supplies. However, Amazon still lags far behind.

Chewy offers a one-stop shopping platform for pet owners, covering all their needs on pet food, supplies, toys, medicines, training and other services. Such comprehensive offering is probably the key factors behind its ability to beat Amazon.

Freelance marketplace Fiverr made its debut at US$21 on June 13, and then soared to US$44 last week. That has pushed its market capitalization to nearly US$1.4 billion.

The company has created an online marketplace for companies to buy freelance services in a time and cost efficient way.

To use the service, freelancers just need to open an account on Fiverr, and list their skills, track record and prices, as well as reviews from previous buyers.

The platform allows freelancers to make comments on their employers.

In addition, Fiverr introduces a payment protection mechanism.

Employers are required to make payment through Paypal, credit card or bitcoin after placing an order. The money is held by Fiverr temporarily and released to freelancers only after employers’ approval of the freelancers' work. When there is dispute, Fiverr will play the role of an arbitrator.

In the past, it would take a lot of time and communication efforts for companies to hire freelancers and for freelancers to find a job. Trust is also an issue.

The Israel-based start-up managed to tackle these pain points and became an instant hit when launched in 2010 in the country. It has now become the biggest freelance marketplace in the US and Europe.

Among other recent listings, Beyond Meat, a plant-based meat manufacturer has spiked over five times from its IPO price, while video-chat firm Zoom soared 178 percent.

There could be some other hidden gems in the small to mid-sized IPO segment.

This article appeared in the Hong Kong Economic Journal on June 25

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Economic Journal columnist