IPOs without profits: New tech giants pin their initial public offerings on long-term potential

IPOs without profits: New tech giants pin their initial public offerings on long-term potential

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podcast2-630x355.pngScreenshots from the IPO filings from (clockwise from upper left) Lyft, Uber, Slack and Pinterest.

What do Pinterest, Lyft, Uber and Slack have in common?

Yes, they’re all newly public companies, or preparing to make their initial public offerings. But they also share something in common on the bottom line — proceeding with their IPOs with lots of revenue and growth but, so far at least, without the consistent profits to show for it.

And they’re part of a trend. Eighty-three percent of IPOs in the first three quarters of 2018 were made by companies that hadn’t posted profits in the prior 12 months.

ben-300x300.jpgBen Gilbert, co-founder of Pioneer Square Labs and co-host of the podcast Acquired.

So what’s the future of these companies? And what do they say about the state of the tech industry?

On this episode of the GeekWire Podcast, we’re joined by someone who has spent a lot of time looking at the financials of many of these companies: Ben Gilbert, co-founder of Seattle’s Pioneer Square Labs, and co-host of the podcast Acquired, which tells the stories of major tech companies, acquisitions, IPOs and other deals.

“I would say we are seeing way too much similarity between these IPOs and what you would see in early stage pitch decks, which is selling on a story and selling on a narrative,” he says.

At the same time, he notes, some of these companies have reached unit profitability, making money on their products and services even as marketing and related expenses make them unprofitable. And there’s a lot more in play with these companies that could impact their long-term earnings — from autonomous vehicles and electric scooters to the future of workplace collaboration.

Ben Gilbert and his Acquired co-host David Rosenthal have been focusing on this new wave of public companies on their recent podcast episodes, starting with Lyft and Pinterest. Subscribe to the Acquired podcast here.

Listen to the GeekWire Podcast above, or subscribe in your favorite app.

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