The hunger for new issues is voracious and bankers trying to pad year-end bonus numbers can’t keep up. Their new stocks are making money, but the companies themselves certainly are not.
Here’s the Wall Street Journal, writing about DoorDash (abbreviated, with highlights added):
“DoorDash Inc. delivered for investors, surging 86% in its stock-market debut on Wednesday. The seven-year-old company ended its first trading day valued at about $71.8 billion, higher than many of the restaurant companies that depend on its couriers. The San Francisco-based company has never turned an annual profit, but a surge in demand during the Covid-19 pandemic has helped to transform it.”
Using Bloomberg data going back to the early 1990s, let’s look at the total number of U.S. listed initial public offerings that showed a negative net income at the time of the offering. If they didn’t report financials at the time, then we ignored the listing.