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Setting the bar high

ConocoPhillips (COP)

ConocoPhillips smokestacks
Mario Tama / Getty

ConocoPhillips was founded in 1875 as the Continental Oil and Transportation Company, and remained one of the most successful oil companies during its first century. By the early 1980s, it had merged with DuPont Chemicals, a partnership that lasted until DuPont decided to explore biotechnology, and Conoco, staying in the petrochemical industry, opted to explore foreign assets. This was a major reason why it went public.

Although, initially, interest in Conoco’s potential IPO was low, the company began a successful PR campaign to sell itself. By the time it actually went public in October 1998, its IPO was the biggest in history. The IPO brought in $4.4 billion, and Conoco remains the third-largest oil company by market cap in the U.S.

UPS (UPS)

UPS truck with a driver at the wheel
Robert Nickelsberg / Getty

UPS went public in 1999, and within a few hours of opening, its stock prices had shot up 30%. Initially, the company had projected its shares at $50 each, but prices peaked before noon at close to $71, and settled by the end of the day at $67.25.

The global shipping company was a solid bet to go public in the months before its debut: Not only did the fiscal year ending in September see UPS rake in $1.95 billion in revenue (in 1999 dollars), but it had $2.6 billion in cash-on-hand and relatively little debt, a clear indication that it took its financial viability seriously.

UPS made history at the time as the largest initial public offering of the 20th century. It’s considered to be one of the most successful IPOs of all time.

Blackstone Group (BX)

Stephen and Christine Schwartzman arriving at a Blackstone gala
Mireya Acierta / Getty

The Blackstone Group was one of the first major private equity firms to go public, which it did in 2007. The company’s strategy was to take advantage of the high demand from pension funds and wealthy individuals looking for alternative assets to invest in.

Blackstone was in a good position to go public in the months before its IPO. In 2006, it had earned $2.3 billion, a 77% increase from the year before. The company also announced its intention to go public months before launching its IPO to generate buzz.

The success of Blackstone's IPO can be attributed to its founders' financial sector experience and their knowledge that it was the right time to launch. In 2024, Blackstone was ranked first in a list of the top 10 private equity firms in the world by capital raised. Over the past five years, it has raised $125.6 billion.

Visa (V)

assorted credit cards with two Visas featured
Matt Cardy / Getty

Visa is actually a payment network processor, which provides a network for safe and quick payment transfers — the physical card you use is the property of your bank. The network went public on March 19, 2008. Bloomberg points out that Visa chose a conventionally terrible time for its IPO, opening just days after the Lehman Brothers’ bank collapsed.

The secrets to Visa’s success are threefold: The company underwent a two-year-long restructuring in order to streamline its global operations, which would give it better chances for approval after its SEC audit; it was profiting from the global pivot to online banking; and its executives did a great job of convincing investors that it was a stable, long-term investment.

Today’s economic climate is similar to what it was 15 years ago, when Visa initially went public; its stock has gone up 1,900% since.

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Falling flat

Here are some of the companies that, surprisingly, were complete bombs when they went public.

Facebook/Meta (META)

darkened hand holding a phone displaying the Meta logo
SOPA Images / Getty

Going into 2012, Facebook reported that it not only had 483 million daily active users, but that its profits had hit $1 billion the previous year — an increase in revenue of 65% from 2010.

The world was watching when it filed for an IPO with the SEC in February 2012. In May, it was the largest IPO up to that point, offering almost half a billion shares at $38 each and raising $16 billion. The stock price began faltering almost immediately, and ultimately, over a few months, led to a loss of $50 million.

Financial pundits pointed out that the lack of confidence from potential investors could have been due to the fact that 57% of the shares that were put up had been owned by previous shareholders, which would inflate the valuation of the company. Another potential reason for its decline was that the site had to shift its focus from a social networking site to a money-making venture, turning its users into its product to make a profit.

Although the social network is still around, its IPO is roundly considered one of the biggest duds ever.

Casper (CSPR)

a delivery man pushing a dolly loaded with a Casper-branded box
The Washington Post / Getty

The company that promised you the sleep you’ve always dreamed of (and shipped it to you in a box) first went public in February 2020, with its shares priced at $12 each. In retrospect, there seems to be no good reason why it made this move, because it was immediately a disaster.

The week before Casper went public, the company valued itself at $705 million. But a few days after it launched, it was valued at just $500 million. This was because it had drawn a loss the previous year, which the company chalked up to marketing initiatives as it got ready to go public. The company had also failed to anticipate the oversaturation of the mattress market and the lack of repeat buyers.

A little under two years after its “embarrassing” debut, the company was sold to a private equity firm and taken off the stock market.

Uber (UBER)

a black car displaying the black Uber logo
Nathan Stirk / Getty

The ride-hailing app had all the markers of stock market success. Before it went public in May 2019, its executives estimated its value at $90 billion, and its shares were priced between $44 and $50 each. At one point, it had been considered the world’s most valuable start-up — but it was also dogged by scandals: implementing surge pricing during natural disasters, unethical business practices and harassment allegations, to name a few.

It was apparent early that Uber would go public because the company needed the money. In 2018, the company warned investors it would be another three years before they turned a profit. Experts looked at Uber’s prospectus and called the business a scam, given how it hadn’t addressed so much of its bad press, or how much money it was losing annually. Unsurprisingly, the company belly flopped into the stock exchange pool.

Two years after its IPO, Uber’s stock price was idling far below $45, and even though it’s had periodic rallies, it has consistently been an underperformer since.

Robinhood (HOOD)

a hand holding a phone with the Robinhood app on display, against a background of the Robinhood logo
Chris Delmas / Getty

Robinhood, the investment platform that promised its users commission-free trading of stocks, crypto, and ETFs, saw its IPO share prices immediately tumble when it went public in 2021.

It debuted at a reasonable $38 per share, but its prices fell by 8% on the first day. It seemed to rally, but by the end of its first week its value had started to decline.

Part of Robinhood’s failure was ascribed to circumstances outside of its control, like the crypto crash. Bad press, which included the Massachusetts Securities Division criticizing the app’s similarity to a game, didn’t help either.

By late 2023, Robinhood’s stock price had fallen to 85% of its peak 2021 value.

Deliveroo (ROO)

A Deliveroo delivery person on a bike, with a Deliveroo backpack on his back
nrqemi / Shutterstock

When U.K.-based food delivery service Deliveroo launched its IPO in 2021, it was eight years old. It had grown quickly thanks to a surge in pandemic-related food delivery, and was fresh off Amazon acquiring 16% of the company. These were all encouraging predictors of its success going public.

But, when its IPO opened, Deliveroo’s stock price plunged by 26%, wiping $2.8 billion U.S. from its initial market capitalization. It fell another 1.9% the following day.

Financial professionals chalked up Deliveroo’s drop to a perfect storm of factors, but it was mainly doomed by recently-passed legislation aimed at protecting gig workers. The company’s habit of categorizing its drivers as “independent contractors” was too risky a move for many potential shareholders.

Slow progress sometimes makes perfect

Progress towards an IPO can be slow.

After years of delays, Instacart (CART) went public in late 2023 and was valued at $10 billion, much less than its peak revenue of $39 billion in 2019. But at its launch, it was still profitable. It had begun diversifying its income streams through advertising as early as 2017, a strategy that worked well for the company. The extra time and preparation also was an advantage; by the end of its first day, shares had gone up in value by 12.3%.

Trump Media and Technology Group, the company that owns social network site Truth Social, launched their IPO in March 2024 (DJT). By the close of the first day, shares of Trump Media and Technology Group were up 16.1%, which worked out to $57.99 a share.

The site was only founded in 2021, but it had planned to go public years before it actually did.

While the former president was never the full owner of the new group Trump Media and Technology Group, he owns close to 60%; and the former president and the social networking site’s fortunes seem to be inextricably tied. In the light of his recent legal troubles, the site’s value has fallen to half of what it was after that first day.

Financial tech company Stripe and buy now, pay later website Klarna are just two of the privately owned companies that have built up some buzz about becoming public in the next little while.

After a surge in business during the pandemic, Stripe’s revenue fell in 2022 and 2023, causing it to reevaluate its estimated value. At the end of the year, the company had hired investment advisors to provide guidance through the IPO process.

In preparation for its 2024 offering, Klarna shrunk its losses in 2023 by 76%, shaved off over 1,000 jobs, and made significant investments in its infrastructure.

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The final bell

There are definite similarities between the companies that aced going public and those that were dead on (or close to) arrival.

The successful IPOs didn’t need to go public to make quick cash. If the conditions weren’t right, they were able to pull back and wait until conditions improved. Successful IPOs had name recognition, and were able to leverage advertising and public relations in their favor in the months leading to their debut.

On the other hand, disastrous IPOs also share some glaring characteristics. Being “one among many” in your industry makes it that much harder to stand out. Launching your IPO during a bear market can scare potential investors. Not recognizing bad advice or political factors may set your company down the wrong business path. And last but certainly not least, being stretched too thin financially before you go public can make investors run from your red lines.

Investing can be a solid way to passively earn money, and getting in on the ground floor of a compelling company can be really exciting. Hopefully, now that you’re aware of certain trends when it comes to IPOs, you'll have a better chance at making the right move when the next unicorn comes along.

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Bronwyn Petry Email Specialist

Bronwyn is currently part of the email content team for Moneywise. Before starting here, they freelanced for several years, focusing on B2B content and technical copy. Pre-pandemic, you could find them planning their next trip, but lately, if they're not at work, you can find them hanging out with their cat and dog.

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