Eventbrite’s IPO should encourage tech companies to get out while they still can

Eventbrite is having one hell of a debut on the New York Stock Exchange this morning.

Shares of the ticketing startup, founded back in 2006, have shot up over 50 percent in trading on the NYSE. After pricing its shares at $23 in its initial offering, investors have bid up the stock to a whopping $37, putting the company’s valuation at nearly $3 billion.

$EB prices $23, opens $36 pic.twitter.com/cYgCuqbmh8

— (@hunterwalk) September 20, 2018

That’s well above where the ticketing company had hoped to be when it initially set terms for the public offering earlier this month.

Eventbrite sets IPO range of $19 to $21, valuing it at $1.8B

The company started trading priced above its share price and nearly doubled its valuation. And if Eventbrite can do it, really almost any later-stage startup should be thinking about the public markets right now.

Performance for the San Francisco ticketing company has been… somewhat lackluster. As we noted when wrote about the company’s offering:

Eventbrite is not profitable and has been losing money since 2016. According to the documents, it posted losses of $40.4 million in 2016 and $38.5 million in 2017. In the first six months of 2018, the company has posted a net loss of $15.6 million. The company is making changes to make up for some of those losses — at the end of August, it announced a new pricing scheme for its customers using the “Essentials” package.

Its revenue is rising though, increasing from $133 million in 2016 to $201 million last year.

Since the beginning of the year tech public offerings have been on a tear. As The Wall Street Journal noted in July, 120 companies had raised $35.2 billion on U.S. exchanges at that point — the best showing for public markets since 2014 and the fourth busiest year since 1995, according to the financial data and analysis service Dealogic.

The state of the IPO market

We’ve noted before that it’s a bit mind-boggling that investors and their portfolio companies wouldn’t be taking more advantage of these heady times. Nothing lasts forever (not even cold November rain) and certainly not markets that have been this bullish for this long.

Some of the reasoning is likely thanks to a market that’s still awash in private equity, sovereign wealth and late-stage dollars. SoftBank has hundreds of billions to invest; private equity firms are beginning to look at growth-stage companies the way that I look at banana cream pies from Cassell’s; and venture firms are beefing up big time to keep up with the Joneses (or in this case, the Blackstoneses).

However, the fun is certainly going to come to an end, and likely sooner rather than later. Early-stage investors are beginning to dole out their advice on lowering cash burn (something that happens every time they see the beginning of the end of the beginning of the end).

Low burn rates have gone out of fashion, but I expect we'll be reminded very quickly at the beginning of the next downturn why they're so valuable for early-stage startups.

— Sam Altman (@sama) September 19, 2018

With that in mind, later-stage companies should be looking for the exit signs wherever they can find them. Right now, that’s an IPO window that seems to be wide open.

Post by startupsnows.blogspot.com