The cryptocurrency exchange platform Coinbase went public on April 14, 2021, raising $86 billion for the company in one of the biggest initial public offerings (IPO) of the year. 

It is the first digital currency exchange to go public, and the offering could lend more credibility to the fledgling cryptocurrency market, while possibly encouraging more IPOs in the industry, according to experts.

Here are some highlights:

• Coinbase was founded in 2012 in San Francisco, by Brian Armstrong, currently the company’s chief executive officer. 
• Coinbase is the first cryptocurrency exchange to go public. It helps users buy, sell, and store cryptocurrency. 
• It is the largest digital currency exchange in the U.S. and globally by trading volume, offering access to about 50 different currencies.  It reportedly has 56 million users, and 6 million active monthly users. 
• The company went public through a direct listing, which means it sold its shares to the public without the usual middlemen, such as investment banks and other underwriters, that typically help with a traditional IPO. Coinbase, which is listed on the Nasdaq, is reportedly the largest company to use a direct listing. Other companies that have recently gone public through direct listings include Slack Technologies, Palantir Technologies, and Roblox Corp.
• Digital currencies Bitcoin and Ethereum reportedly make up more than half of Coinbase’s trading volume.

• In addition to Coinbase, other popular cryptocurrency exchanges include Binance, Bitfinex, Huobi Global, Kraken, and Gemini, founded by the Winklevoss twins in 2015. 
• The IPO has made Armstrong a multibillionaire, worth approximately $16 billion.

What’s cryptocurrency? 

Cryptocurrency is an open-source form of currency that allows users to exchange value without depending on a pre-existing physical currency, often referred to as fiat currency. While Bitcoin is the most widely held cryptocurrency, since its introduction in 2009, more than 2,000 types of cryptocurrency have emerged, including Ethereum (Ether), Litecoin, ZCoin, and Ripple. 

Cryptocurrency typically uses something called blockchain, or distributed ledger, technology. That means the code produces an encrypted record of the value of each virtual coin and the transactions it’s involved in, distributing that record across numerous networks on the Internet. 

While the value of many cryptocurrencies is tied mostly to demand, which can make their value fluctuate widely, another type, called a stablecoin, is tied to an underlying asset such as gold or the U.S. dollar. 

Bitcoin, the largest cryptocurrency by market capitalization, reportedly reached a record high of $61,000 in March, 2021. The total value of the cryptocurrency market is currently about $2 trillion.

Dangers and risks of cryptocurrency

Initially, a lack of oversight and regulation led to a number of scandals centered around transactions made with cryptocurrency and the exchanges where cryptocurrency is bought and sold. For example, bitcoin was the currency used in many of the transactions on the now shut down Silk Road, a marketplace for drugs and other illegal items on the “dark web.” 

Good to know: In the U.S., cryptocurrency is not considered an official currency, and regulators have taken a hands-off approach to regulating it, providing oversight while allowing it to be bought and sold on specialized exchanges, used in financial transactions, and offered to the public through something called an initial coin offering, or ICO. Some of the regulators include the Securities and Exchange Commission, the U.S. Department of the Treasury, and the Commodity Futures Trading Commission. Unlike bank deposits, cryptocurrency deposits are not insured by the U.S. Federal Deposit Insurance Corporation (FDIC).

Until recently, big banks have been wary of cryptocurrencies due to the potential risks and regulatory concerns that could accompany them. Keep in mind that cryptocurrencies can be volatile, meaning they’re subject to big swings up and down.

More about direct listings

A direct listing—sometimes called a direct offering—is a way for a company to sell its shares to the public without involving any middle men, or intermediaries.

It’s different from an initial public offering (IPO), where the company relies on an investment bank to take it public. Such a bank is called an “underwriter,” because it assumes much of the risk associated with the IPO.

With a direct listing, company executives, early investors, and employees who own equity, or shares, are given the option to convert them into a public stock and then sell it to the public through a stock exchange such as the New York Stock Exchange or the Nasdaq. (These stakeholders are not obligated to sell their shares, however.)

With a direct listing, the stock exchange sets the starting trading price. It’s called an “initial reference price,” and it’s based on new investor demand for the shares. In contrast, the underwriters set what’s known as an “opening price” in a traditional IPO, through a process called a roadshow.

Check out Stash’s IPO Calendar to find out more about some recent public offerings. You can find out more about Coinbase in its prospectus. 

Lock-up periods and the Stash Way

Companies usually have a lock-up period following an IPO. A  lockup period is when company insiders, such as employees granted stock options or executives who own shares, sign an agreement that prohibits them from selling shares for a specified period of time, often a period of six months. When lockup periods expire, insiders or other early investors may want to sell their stock in order to make a profit from their shares. When these insiders start to sell their shares, sometimes that can cause a company’s stock price to fall. Companies that go public through a direct listing typically do not have lock up periods.

Following an IPO, stock exchanges such as the New York Stock Exchange (NYSE) or the Nasdaq will list the stock so that investors can purchase shares of the newly listed stock. If you’re an investor, it’s important to know when companies are going public and the price at which they’re expected to trade if you’re interested in investing in those new companies. 

Following an IPO, the price of the newly issued stock can move significantly, so it’s especially important to remember the Stash Way.

The Stash Way includes regular investing, investing for the long term and diversification. You can also check out Stash’s portfolio diversification analysis tool in the app to help you diversify. And remember, all investing involves risk, and you can lose money in the stock market.

Stash currently doesn’t offer the option to invest in cryptocurrencies. Stash does allow you to invest in companies that use or develop blockchain technology, through its ETFs.

The post Highlights from Coinbase’s IPO appeared first on Stash Learn.

In less than a decade, it had received billions of dollars from investors, expanding from a single office building in Manhattan to a network of shared working spaces across the globe.

But soon after it filed its S-1 paperwork with the Securities and Exchange Commission (SEC) in August 2019, things began to unravel.

The paperwork showed WeWork had hundreds of millions of dollars of debt, which reportedly caused investors to question the company’s $47 billion valuation, and whether the company’s business model was working. It also brought up questions about the leadership of Adam Neumann, WeWork’s chief executive, and co-founder.

Sometimes things don’t always work out as planned. And an IPO can just as easily be unsuccessful as successful.

If you’re confused by what happened with WeWork, we’ll break it down for you.

Why are IPOs important, and why do they sometimes fail?

• IPOs can be one of the major events in a private company’s life. They usually occur following a rapid period of rapid growth, after a company has taken in money from investors, called venture capitalists. This money helps companies increase their size, and hopefully become profitable. But investors eventually expect a return on their investment.
• Two ways that can happen is if the company goes public, or is acquired by another business. Both scenarios allow investors to sell their shares, hopefully for more money than they paid for them.
• But IPOs require companies to reveal information about their operations to the Securities and Exchange Commission, in a document called an S-1, or prospectus. This is a public document, which anyone can view. It opens up the company to public scrutiny, and if a company has any financial problems, it will come to light. In WeWork’s case, the massive amount of its losses—reportedly more than $200,000 every hour—immediately became apparent.
• Investors can lose confidence in the company and its prospects in the public markets. Investors reportedly had concerns about Neumann, specifically around his controversial leadership style.  Neumann reportedly cashed out  $700 million worth of shares via sales and loans prior to the IPO, which was not a good sign for the company. Typically, the CEO will wait until after the IPO to sell shares, at what’s expected to be a much higher price.

More details about WeWork

• Founded in 2010 by Neumann and Miguel McKelvey, the company grew to 12,500 employees, and claims to manage 16 million square feet of office space with 500,000 members around the world, according to its prospectus.
• It received $13 billion of financing from investors. One of its largest investors is the Japanese tech firm Softbank, which owned 30% of the company.
• Neumann was known for a freewheeling leadership style, which some employees said led to an allegedly “frat boy” atmosphere. Neumann reportedly voiced a desire to be “president of the world,” the world’s first trillionaire, and he wanted to put WeWorks on Mars, among other things.
• The company’s valuation dropped to $8 billion from a massive $47 billion, in early October, and it was on the verge of bankruptcy.
• It received a $10 billion rescue package from Softbank, its top investor, while announcing the layoffs of thousands of its workers.
• Neumann received a $1.7 billion payout package, in exchange for leaving the company and giving up his ties and titles there.

Other unsuccessful IPOs this year

While WeWork’s scenario is extreme, because it ultimately cancelled its IPO and had to be bailed out from the brink of bankruptcy, it has followed other unsuccessful high-profile IPOs this year, such as Uber, Lyft, and Peloton.

The lack of success of ultra-hyped IPOs has led experts to speculate that private valuations of many companies seeking IPOs today are maybe too high.

Follow the Stash Way

All investing involves risk, and it’s possible for your investments to lose value. Stash recommends following the Stash Way, which includes investing for the long-term, investing regularly, and diversification.

The post The Rise and Fall of WeWork appeared first on Stash Learn.

But what does that mean? After all, the company just had an initial public offering, or IPO.  So what’s the difference between an IPO and a secondary offering? Read on and we’ll explain.

IPO vs. Secondary Offering

An IPO is when a company sells its stock to the public for the first time. One of the goals of an IPO is to raise money for the company, through the stock sale. In Beyond Meat’s case, it raised nearly $250 billion through its IPO.

A secondary offering, sometimes called a follow-on offering, since it follows the IPO, allows the company to sell more stock to the public. And the goals of a secondary offering are similar to an IPO, because it lets the company raise more money through the stock sale, for a variety of purposes.

In Beyond Meat’s case, it hopes to sell 3.25 million more shares, 250,000 of which are new shares expected to bring in as much as $40 million for the company, according to its filing with the Securities and Exchange Commission (SEC). Beyond Meat plans to use the money to expand its product offerings to expand its manufacturing capabilities both domestically and internationally, and to increase branding and marketing efforts, according to the filing.

Good to know: Secondary offerings can be used in other ways. Sometimes a company insider such as the chief executive, can use a secondary offering to sell a portion of his or her stock to raise money for some other purpose. For example, in 2013, Mark Zuckerberg sold more stock after Facebook’s IPO in 2012, to raise money to pay taxes related to his stock sales.

How does a secondary offering affect share price?

Issuing more shares can sometimes—but not always—cause the price of a company’s stock to decrease.

Think of it as a simple economics lesson, where experts often talk about supply and demand. If the supply for a particular product or service is greater than demand, prices will fall. If demand outpaces supply, prices will rise. So, if a company offers more shares, it could lower the value of the existing shares, in a process called dilution. Simply put, there are more shares to buy and sell.

Here’s something else to keep in mind: Companies that have had successful IPOs may conduct a secondary offering, prior to the expiration of something called a lock-up period, when more shares will be offered to the market, and the stock price could fall.

A lock-up agreement requires employees, and other company insiders who own stock, to sign an agreement that prohibits them from selling shares for a specified period of time once the IPO is complete. (In Beyond Meat’s case, the lock-up period is 180 days.) When lock-up periods expire, insiders will often sell their stock in order to realize a profit, which can cause the stock price to fall. The expiration of a lock-up can affect the share price.

A secondary offering could let executives and early investors in a company sell before the lock-up expires, as is likely the case with Beyond Meat, according to reports.

It’s always important to remember that stock prices may fluctuate significantly due to the expiration of something called a lock-up period.

The stock of newly public companies can be volatile

In the months following an IPO, the newly issued stock can be subject to significant increases and decreases, at least in the short run. That’s known as volatility. Volatility for the stock can be especially high in the first few months following an IPO, and so can the potential for short-term losses as a result.

That’s because investors, analysts, and other stock market participants are often uncertain about the prospects of a newly public company, and that can all factor into the share price. For example, investors typically want to know if a company is worth the valuation it achieved at the time of its IPO. They may also want to know if a company will be profitable in the years to come, or whether it will continue to have losses.

Other companies that have had follow-on offerings

Social networks Facebook and LinkedIn had follow-on offerings in 2013 and 2011, respectively. More recently, BJs Wholesale Club sold 10 million shares in a follow-on offering.

Stash encourages all investors to follow something called the Stash Way, which includes regular investing, diversification, and investing for the long term. Find out more about the Stash Way here.

The post Why Do Companies Have Secondary Offerings? appeared first on Stash Learn.

So what is a direct listing?

A direct listing—sometimes called a direct offering—is a way for a company to sell its shares to the public without involving any middle men, or intermediaries.

It’s different from an initial public offering (IPO), where the company relies on an investment bank to take it public. Such a bank is called an “underwriter,” because it assumes much of the risk associated with the IPO.

With a direct listing, company executives, early investors, and employees who own equity, or shares, are given the option to convert them into a public stock and then sell it to the public through a stock exchange such as the New York Stock Exchange or the Nasdaq. (These stakeholders are not obligated to sell their shares, however.)

Wait, what’s an IPO again?

An IPO is the first time a company sells its shares to the public through an exchange.

When a company wants to open new stores, build or acquire a factory, or expand in some other way, it may need additional resources to pay for it. Company executives may use an IPO to raise additional capital to invest in and grow their business.

Often a company does not yet have enough internally generated funds to finance such projects. Going public is one way to raise a relatively large sum of money in a relatively short period of time.

Companies typically use investment banks to underwrite the shares that will be sold to the public. That means the company relies on the bank to set the opening price of the shares before they start trading. This can cost a lot of money—we’re talking potentially millions of dollars.

Direct listing vs. IPO

Here are some other ways a direct listing differs from an IPO.

• With a direct listing, the stock exchange sets the starting trading price. It’s called an “initial reference price,” and it’s based on new investor demand for the shares. In contrast, the underwriters set what’s known as an “opening price” in a traditional IPO, through a process called a roadshow.
• There isn’t a lock-up period in a direct listing. A lock-up period is typically a period of time—usually about six months—where company insiders aren’t allowed to sell their stock. When a lockup expires, that can make the stock of the newly public company more volatile. With a direct listing, a company insider may sell their shares right away.
• By doing a direct listing, the company also isn’t “diluting” its shares, or potentially making them less valuable by creating more of them. Often in the traditional IPO process, the investment bank handling the IPO will create more shares to sell to the public.
• In contrast to a direct listing, the investment bank underwriting an IPO often creates an over-allotment of shares to sell to the public if demand for the stock becomes too great. That can smooth out price volatility. Such a practice doesn’t exist in direct listing.

As in a traditional IPO, companies pursuing a direct offering are still required to file paperwork about the listing with the Securities and Exchange Commission (SEC). You can find out more about any publicly listed stock on the SEC’s website EDGAR. Part of your due diligence as an investor should involve examining paperwork associated with a new filing.

Remember the Stash Way—invest for the long-term, invest regularly, and don’t put all of your eggs in one basket.

The post Direct Listing vs. IPO: What’s the Difference? appeared first on Stash Learn.

It also had one of the most successful IPOs of 2019 so far, suggesting that investors may be interested in vegan and vegetarian food products that may have less of an environmental impact than traditional meat production, according to some sources.

The company had priced its shares at a range between $23 and $25. On May 2, 2019—its first day of trading—the stock price leapt 164% to $65 a share, according to reports. Since then, the company’s stock has traded as high as $88, and as of mid-day May 21, 2019, it was trading at $78.50 a share.

Here are more details about Beyond Meat, the market it hopes to tackle, and the risks of investing in companies that have recently had IPOs.

About Beyond Meat

Beyond Meat was founded by Ethan Brown in 2009, in Los Angeles, California.

Its products, made from pea protein and other vegetable sources, include vegan sausage and chicken. The Beyond Burger, a veggie burger, is currently sold in grocery stores such as Whole Foods and restaurants including TGI Fridays.

Prior to going public, the company received $122 million in venture capital funding, including money from venture capital firm Kleiner Perkins and the meat producer Tyson Foods, according to sources.

It raised about $250 million through its public offering, and currently has a market cap of $4.6 billion. Beyond Meat will use proceeds from the sale of its stock to expand its facilities, according to its prospectus.

About the meat substitute market

Beyond Meat is one of a small but growing number of meat substitute companies, including Impossible Foods (maker of the Impossible Burger) and Morningstar Farms.

The global market for vegan and vegetarian meat alternatives had sales of roughly $4.2 billion in 2017, according to industry data. U.S. consumers purchased $3.1 billion of plant-based foods in 2017, an 8% increase compared to 2016. By 2025, the plant-based food market is expected to grow to more than $7.5 billion. And, by some estimates, it could grow to $41 billion in the next ten years.

According to a recent Gallup poll, 5% of Americans identify as vegetarians, and 3% are vegans.

Risks to Beyond Meat

In its prospectus filing with the Securities and Exchange Commission (SEC), Beyond Meat reports that it has yet to achieve profitability. In other words, it loses more money than it makes each year.

• For the full year 2018, it lost $29 million, with revenue (total sales) of $88 million. It also lost between $25 and $30 million in 2016 and 2017, according to its SEC paperwork.
• Beyond Meat says its expenses will continue to increase as the company expands.
• Beyond Meat also says it may experience expansion and supplier issues, such as pea protein shortages, that could hamper its growth.
• At least one analyst predicts the company won’t break even for another five or six years. When a company breaks even, it’s making as much money as it’s losing.

IPOs can be volatile

When a company has an IPO, it’s typical for a newly issued stock to be subject to significant increases and decreases, at least in the short run. That’s known as volatility. Volatility for the stock can be especially high in the first few months following an IPO, and so can the potential for short-term losses as a result.

That’s because investors, analysts, and other stock market participants are often uncertain about the prospects of a newly public company, and that can all factor into the share price. For example, investors typically want to know if a company is worth the valuation it achieved at the time of its IPO. They may also want to know if a company will be profitable in the years to come, or whether it will continue to have losses.

After an IPO, prices may fluctuate due to the expiration of something called a lock-up period, where company insiders such as employees sign an agreement that prohibits them from selling shares for a specified period of time. (In Beyond Meat’s case, the lock-up period is 180 days.) When lock-up periods expire, insiders will often sell their stock in order to realize profit, which can cause the stock price to fall.

Do your homework

It’s important for investors to carefully examine any company whose stock they plan to buy. Remember, as a public company Beyond Meat is required to file paperwork with the Securities and Exchange Commission (SEC) on a regular basis, detailing its financial performance and providing other critical information about the company that investors will want to know about.

That information, which includes a company’s revenue, profits, and losses is available to the general public—meaning anyone can look at it.

You can find out more about the Beyond Meat by looking at its prospectus, a publicly available document on the Securities and Exchange Commission’s website EDGAR.

Follow the Stash Way!

Stash recommends following the Stash Way, which includes regular investing, diversification, and investing for the long term.

Investing for the long term can help insure that you aren’t locking in your losses due to short term fluctuations in the price of a stock.

And remember: All investing involves risk. It’s possible for stocks, bonds, and other securities to lose their value due to changing market conditions.

The post Look out Beef, It’s Beyond Meat appeared first on Stash Learn.

After plenty of hype, suggesting Uber’s IPO would be one of the largest in a decade, the company’s stock fell 7% from its offering price of $45 on its first day of trading on May 10, 2019.

It is trading at about 9%  below its opening price as of Wednesday, May 15.

And that’s not all. By the end of its first trading day, Uber’s valuation stood at $76 billion, far below its initial estimate that it could reach as high as $120 billion, according to reports.

In that regard, what’s going on with Uber is similar to what happened to its rival Lyft after its own IPO. Lyft’s stock price is currently 26% below the high range of its opening price of $72 since the end of March. And it’s current valuation of $15 billion is about a third lower than the valuation Lyft sought at the time of its IPO.

What happened?

It’s unusual for a company to stumble on its first day of trading, according to the New York Times. In the last 20 years, only 18 companies have seen their stock price fall in their public offerings.

Uber’s value may have been set too high, according to multiple reports. Uber spent more than a decade as a private company, with a value set by a small group of investors, and it never had to face the scrutiny of public markets.

Another theory is that Uber may have waited too long before going public, diminishing investor enthusiasm about the stock. Uber was founded by Travis Kalanick and Garrett Camp in 2009. It started out as UberCab in San Francisco, and then quickly moved on to other cities and countries, dropping “Cab” from its name in the process.

Over the last decade, the company has raised more than $24 billion in 22 rounds from venture capitalists.

The company, which allows customers to hail a ride by using an app that matches consumers with nearby drivers, is the dominant player in the ridesharing industry with about 70% of the market.

And there are other potential reasons for its stumble.

IPOs can be volatile

When a company has an IPO, it’s typical for a newly issued stock to be subject to significant increases and decreases, at least in the short run. That’s known as volatility. Volatility for the stock can be especially high in the first few months following an IPO, and so can the potential for short-term losses as a result.

Why? Investors, analysts, and other stock market participants are often uncertain about the prospects of a newly public company, and that can all factor into the share price. For example, investors typically want to know if a company is worth the valuation it achieved at the time of its IPO. They may also want to know if a company will be profitable in the years to come, or whether it will continue to have losses.

In Uber’s case, it had revenue of $11 billion for 2018, an increase of more than 40% compared to 2017. But Uber lost $1.8 billion in 2018, and it has reported operational losses of more than $13 billion since 2015.

Uber also listed in its summary of risk factors that expenses for operations were expected to increase considerably in the future, and that the company may never make a profit.

After an IPO, prices may fluctuate due to the expiration of something called a lock-up period, where company insiders such as employees sign an agreement that prohibits them from selling shares for a specified period of time. (In  Uber’s case, the lock-up is 180 days.) When lock-up periods expire, insiders can tend to sell their stock in order to realize profit, depressing the stock price in the process.

Other companies that saw big fluctuations in their stock prices following their IPOs include Facebook, Twitter, Alibaba, and Snap, to name just a few.

Do your homework

It’s important for investors to carefully examine any company whose stock they plan to buy. Remember, as a public company Uber is required to file paperwork with the Securities and Exchange Commission (SEC) on a regular basis, detailing its financial performance and providing other critical information about the company that investors will want to know about.

That information, which includes a company’s revenue, profits, and losses is available to the general public—meaning anyone can look at it.

You can find out more about the Uber’s lock-up period and other information about Uber by looking at its prospectus, a publicly available document on the Securities and Exchange Commission’s website EDGAR.

Follow the Stash Way!

Stash recommends following the Stash Way, which includes regular investing, diversification, and investing for the long term.

Investing for the long term can help insure that you aren’t locking in your losses due to short term fluctuations in the price of a stock.

And remember: All investing involves risk. It’s possible for stocks, bonds, and other securities to lose their value due to changing market conditions.

The post What Happened With Uber’s IPO? appeared first on Stash Learn.

The company, which allows customers to hail a ride by using an app that matches consumers with nearby drivers, is the dominant player in the ridesharing industry with about 70% of the market. It hopes to raise $10 billion in its initial public offering, according to its prospectus, or the paperwork it filed with the Securities and Exchange Commission (SEC).

Uber is also seeking a valuation of $91.5 billion, about three times that of rival Lyft, which went public on March 29, 2019. At that valuation, Uber’s IPO would be one of the largest in years, on par with e-commerce company Alibaba, and social media company Facebook, according to reports.

Its stock could range between $44 and $50 a share when it begins selling, according to experts.

Here are some more highlights from Uber’s IPO paperwork:

• Uber reported revenue of $11 billion for 2018, an increase of more than 40% compared to 2017.
• Uber lost $1.8 billion in 2018, and it has reported operational losses of more than $13 billion since 2015.

• Uber claims to conduct 14 million rides a day in more than 700 cities around the world.
• Uber drivers have made more than 10 billion car trips since the company launched in 2012.

Plenty of questions

• Uber listed in its summary of risk factors that expenses for operations were expected to increase considerably in the future, and that the company may never make a profit.
• Uber may price its shares at the low end of the spectrum, according to some analysts. By contrast, its rival Lyft had priced its IPO shares at the high end, only to see the stock price fall in recent weeks.
• Uber drivers in the U.K. and the U.S. are planning strikes, to push for better working conditions, including better wages and more regulated fares, according to reports.

More about IPOs

Following an IPO, a new stock can be subject to significant increases or decreases in market price. That’s known as volatility. Stock volatility can be particularly high in the first few months following an IPO and as a result, so can the potential for short-term losses. If you’re in this stock for the long haul though, it could be an opportunity for dollar cost averaging.

Oftentimes, fluctuations in price are due to the expiration of something called a lockup period—this is when company insiders, such as employees, sign an agreement that prohibits them from selling shares for a specified period of time. (According to Uber’s prospectus, the company’s lockup period is 180 days.)

When lockup periods expire, insiders tend to sell their stock in order to realize profit, sometimes causing the stock price to fall, or experience large changes in price in the process. You can find out more about the lockup period and other information about Uber by looking at its prospectus, a publicly available document on the Securities and Exchange Commission’s website EDGAR.

Remember the Stash Way—invest for the long-term, invest regularly, and don’t put all of your eggs in one basket.

More about Uber

Uber, was founded by Travis Kalanick and Garrett Camp in 2009. It started out as UberCab in San Francisco, and then quickly moved on to other cities and countries, dropping “Cab” from its name in the process.

Over the years, the company has raised more than $24 billion in 22 rounds from venture capitalists.

According to Uber’s prospectus, the company has expanded beyond ridesharing to develop additional businesses in bike sharing, scooter sharing, meal delivery, and freight logistics.

Uber’s growth has often been controversial, with problems related to background checks for its drivers, and pushback from metropolitan areas worried that Uber could be destroying the traditional taxi and black car businesses in those locales.

Big questions have also arisen about whether Uber fostered a culture of sexual harassment against women, according to reports.

Kalanick was forced to step down from the company in 2017.  Dara Khosrowshahi replaced him as chief executive officer.

The post Find out More About Uber’s IPO appeared first on Stash Learn.

On its first day of trading, the company’s stock rose to $23.75, an increase of 25% from its stated opening price.

Here are some details of its IPO, according to paperwork it filed with the Securities and Exchange Commission (SEC), called a prospectus.

Pinterest’s IPO

• Pinterest priced its stock at $19 a share, according to sources.
• Pinterest raised about $1.6 billion from its offering, according to reports.
• Following the company’s IPO, it achieved a $12 billion valuation.
• Pinterest reports having $750 million in revenue in 2018, a 60% increase compared to 2017.
• Pinterest loses money. It reported a loss of $62 million for 2018, compared to a loss of $130 million for 2017.

More about Pinterest

Pinterest, which was co-founded in 2010 by its current chief executive officer Ben Silberman, has approximately 265 million active monthly users. Its user base is approximately two thirds women.

It operates in a fiercely competitive social media industry, dominated by Facebook and Twitter, as well as Instagram, Youtube, and Snap, among others.

Given the visual nature of its product, it’s attractive to advertisers who can promote products with so-called click-to-buy adds, according to reports.

More about IPOs

Following an IPO, a new stock can be subject to significant increases or decreases in market price. That’s known as volatility. Stock volatility can be particularly high in the first few months following an IPO and as a result, so can the potential for short-term losses. If you’re in this stock for the long haul though, it could be an opportunity for dollar cost averaging.

Oftentimes, fluctuations in price are due to the expiration of something called a lockup period—this is when company insiders, such as employees, sign an agreement that prohibits them from selling shares for a specified period of time. (According to Pinterest’s prospectus, the company’s lockup period is 180 days.)

When lockup periods expire, insiders tend to sell their stock in order to realize a profit, sometimes causing the stock price to fall, or experience large changes in price in the process. You can find out more about the lockup period and other information about Pinterest by looking at its prospectus, a publicly available document on the Securities and Exchange Commission’s website EDGAR.

Remember the Stash Way—invest for the long-term, invest regularly, and don’t put all of your eggs in one basket.

The post What You Need to Know About Pinterest’s IPO appeared first on Stash Learn.

On its first day of trading, the stock price for the rideshare company jumped 20%. Lyft had priced its shares at a range between $70 and $72, but the stock soon climbed to $87.24.

Now, however, Lyft’s stock trades at about $58 a share*, or 35% below its recent high.

So what’s going on?

IPOs can be volatile

When a company has an IPO, it’s typical for a newly issued stock to be subject to significant increases and decreases, at least in the short run. That’s known as volatility. Volatility for the stock can be especially high in the first few months following an IPO, and so can the potential for short-term losses as a result.

Why? Investors, analysts, and other stock market participants are often uncertain about the prospects of newly public company, and that can all factor into the share price. For example, investors typically want to know if a company is worth the valuation it achieved at the time of its IPO. They may also want to know if a company will be profitable in the years to come, or whether it will continue to have losses.

In Lyft’s case, it had revenue of $2.2 billion in 2018, double its sales in 2017. However, the company lost nearly $1 billion in 2018, according to its stock prospectus, an increase of 32% compared to its losses for 2017.

Other companies that saw big fluctuations in their stock prices following their IPOs include Facebook, Twitter, Alibaba, and Snap, to name just a few.

Do your homework

It’s important for investors to kick the tires of any company whose stock they plan to buy. Remember, as a public company Lyft is required to file paperwork with the Securities and Exchange Commission (SEC) on a regular basis, detailing its financial performance and providing other critical information about the company that investors will want to know about.

That information, which includes a company’s revenue, profits, and losses is available to the general public—meaning anyone can look at it.

You can find out more about the Lyft’s lock-up period and other information about Lyft by looking at its prospectus, a publicly available document on the Securities and Exchange Commission’s website EDGAR.

Follow the Stash Way!

Stash recommends following the Stash Way, which includes regular investing, diversification, and investing for the long term.

Investing for the long term can help insure that you aren’t locking in your losses due to short term fluctuations in the price of a stock.

And remember: All investing involves risk. It’s possible for stocks, bonds, and other securities to lose their value due to changing market conditions.

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The company, which along with rival Uber, has upended the taxi and limousine industry, is seeking as much as $2 billion dollars from its upcoming sale of stock to the public, according to its stock prospectus.

Here are some key details:

• Lyft expects its stock to debut at a range between $70 and $72, according to its prospectus.
• The company has set a target valuation of up to $23 billion. That means the company hopes to be worth that much when it sells its shares to the public in April. How do companies set a valuation? They take into account a combination of things in the business, such as assets, or the things it owns, as well as stock price, earnings and cash flow.
• Lyft had revenue of $2.2 billion in 2018, double its sales in  2017.
• The company lost nearly $1 billion in 2018, according to its SEC filing, an increase of 32% compared to its losses for 2017. When companies lose money rather than make money, it’s often not a good sign for investors. However, many successful companies—Amazon for example—regularly report losses as they launch new products and services and grow.

A competitive ride-share market

Lyft’s biggest rival Uber also plans to go public this year, and is likely to surpass Lyft with a valuation of $120 billion, according to reports. As Lyft ventures into scooter and bike sharing, as well as new technology such as self-driving cars, it faces a raft of other competitors such as Apple, BMW, and Google, as well as Baidu, Waymo, and Lime.

Lyft says in its regulatory filing, the ride-share market in the U.S. is potentially as big as $1.2 trillion.

Two types of shares

Lyft will list two types of shares. It will sell class A shares to the general public, and will maintain class B shares for the company founders and other company insiders. The class B shares have 20 times more voting rights than the class A shares.  Increasing numbers of Silicon Valley startups have used this so-called dual-class share structure, which enables owners to maintain control of their companies indefinitely.*

More background

Lyft has nearly 40% of the U.S. ride-share market, according to reports. According to Lyft’s filing, it had 30 million riders and 1.9 million drivers in 2018.

Logan Green and John Zimmer co-founded Lyft in 2007. Following the IPO, the value of their stock is estimated to be worth $570 million and $390 million, respectively.

If you want to find out more about an IPO, read here.  And if you want to learn about a stock prospectus, click here.

*Note: It’s important to remember that all investing involves risk, and that it’s possible for stocks, bonds, and other securities to lose their value due to changing market conditions. Additionally, following an IPO, the market price for the newly issued security, or stock, may be subject to significant fluctuations in response to factors such as lack of liquidity, as well as market and price volatility. Oftentimes, fluctuations are due to the expiration of a lock-up period where company insiders such as employees sign an agreement that prohibits them from selling shares for a specified period of time (in the case of LYFT this is 180 days). When lock-up periods expire, all insiders tend to sell their stock in order to realize profit, depressing the stock price in the process.

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And it’s taking advantage of something called a confidential filing for its initial public offering (IPO).

While that may sound like something from the world of Spy vs. Spy, a confidential IPO is a tactic used by more and more businesses as they go public.

Read on and we’ll explain all about a confidential filing for an IPO.

What’s an IPO? A quick refresher

An IPO is the first time a company lists its shares on a stock exchange such as the Nasdaq or the New York Stock Exchange (NYSE), meaning they are for sale to the general public.

When a company wants to open new stores, build a factory, hire more employees, or expand in some other way, it may need additional resources to pay for those things. Company executives may use an IPO to raise additional capital to invest in and grow their business.

But when a company decides to go public, it must file something called an S-1 with the Securities and Exchange Commission (SEC). An S-1 is a public document that details a lot of previously confidential information about the business, including how much revenue the company actually makes, how much debt it has, and whether the company is profitable.

It also details how much the various company executives earn in salary and other compensation.

The confidential IPO

The confidential IPO was first introduced in 2012,  as part of the Jumpstart Our Business Startups (JOBS) Act, as as a way to support small companies in their efforts to go public.

It allowed any company with revenues of $1 billion or less to file an S-1 with the Securities and Exchange Commission, but confidentially. The paperwork would be available to the public approximately 15 days prior to the actual offering.

In June, 2017, the SEC extended the confidential filing to all companies, regardless of size.

Companies may want information in their S-1 to stay confidential longer because it prevents competitors from having more detailed knowledge of their operations. It also lets companies test the waters with an IPO without lots of media scrutiny, according to experts.

Ride-share companies Lyft and Uber also both filed for confidential IPOs in late 2018.

More about Slack’s IPO

Slack, which launched in 2013, has raised $1.2 billion in venture capital from various investors. It has a valuation of approximately $10 billion, according to reports.

Stash lets you invest in the single stocks of dozens of public companies.

The post Slack’s IPO: What’s a Confidential Filing Anyway? appeared first on Stash Learn.

The company hopes to raise $648 million from its stock offering, according to reports. The offering will take place in the next few weeks.

When a company has an IPO, it sells shares to the public through a stock exchange such as the Nasdaq or the New York Stock Exchange (NYSE). It has an IPO typically to raise cash to fund operations, to build new stories or factories, or to conduct research and development, among other things.

But why is Dropbox selling shares to the public now?

What’s an exit?

Venture capitalists and other investors put money into a company not only because they believe in its vision and want to help it grow and become successful, but because they hope some day to make a profit from their investment, just like any other investor.

One way they do that is through something called an exit. An exit occurs when an investor, or set of investors, sells its ownership in a company, with the goal of making a profit. One way investors achieve an exit is through an IPO, which lets them sell their shares to the public.

What’s a “unicorn?”

All along, the company has a value. And as investors put more and more money into a company, its value typically keeps growing.

In the tech world, private companies that have reached a valuation of $1 billion or more are called unicorns. That’s a big milestone for any company to reach. There are about 200 of these today.

Dropbox was founded in 2007 by Drew Houston, and since that time, it’s received more than $1 billion in funding from outside investors, in various rounds.

In Dropbox’s case, it has a valuation of about $7.1 billion, according to recent reports. That puts it in the company of other unicorns such as Uber, which has a valuation of $68 billion, and Airbnb, which has a valuation of $30 billion.

Angels and investors

Typically, the first money a company receives is called an angel round, from wealthy individuals known as angels who put a small amount of money into the earliest stages of a company. From there, a company will often graduate to venture capital money, which is more formal financing from a partnership that organizes a fund.

Many of the most prominent venture capital companies are in Silicon Valley, where some of the fastest-growing tech companies in the U.S. are. But a number of important VCs also exist in Silicon Alley in New York.

The venture financing rounds are usually given letter names to indicate when they happen. So the first round will be called an A round. The second will be called a B round, and so on down the line. Typically, the rounds get larger as they advance.

Over the past few years, financial experts have talked about the increasing length of time it has taken unicorns to go public. These companies have received big valuations and pots of money, but often wait ten years or longer to go public, which is more than double the time it took companies to go public in 1999.

Amazon, for example,went public in 1997, just three years after its founding in 1994.

One important reason for the change, according to consultancy McKinsey & Company, is that promising young tech companies have more private capital available to them now than they did in the past.

Pricing shares

Before a company goes public, it has to set the value of its shares. It does this based on previous valuations the company has received, but also following a process called the “road show.”

The road show is when the investment bank in charge of the offering goes out to big investors to assess their interest in the stock. The price is usually determined following the roadshow, when the investment bank has a better sense how much people are willing to pay for the stock.

Dropbox’s $7.1 billion valuation is lower than the $10 billion valuation it received several years ago from private investors, which indicates Wall Street may not be willing to pay as much for the company as previous investors, according to reports.

Good to know: Dropbox’s Houston owns 25% of his company today, according to the company’s prospectus. Each time he received more venture capital money, he had to sell off part of his ownership of the company. (Venture capital company Sequoia, for example, owns about 23% of the company.) Nevertheless, considering its current valuation, Houston’s stake would be worth about $1.7 billion.

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The social networking app surprised investors on Tuesday by reporting strong growth in its fourth quarter.

The creator of the disappearing instant message service has disappointed investors for months with poor earnings and a flagging stock price, which has fallen by nearly half since a high of $27, shortly after its initial public offering in March, 2017.

Why is Snap popping?

Although Snap reported a loss of $350 million in the fourth quarter of 2017, its revenue increased 72% to $286 million compared to the fourth quarter of 2016, according to its most recent filing with Securities and Exchange Commission (SEC).

The revenue increase stemmed from strong ad sales, according to reports. Snapchat’s use of self-serve software for advertisers increased ad impressions–or the number of times an ad is viewed–by 575% in the quarter, according to Reuters.

The social networking app surprised investors on Tuesday by reporting strong growth in its fourth quarter.

Snap also reportedly tripled the number of advertisers buying on its automated auction site over the same time period.

Revenue per user, an indication of how much money each customer earns Snap, increased 46% to $1.53, according to the company. And the number of Snap’s daily active users increased 5% to 187 million in the quarter.

News of the good quarter–the first time the company beat analyst expectations since it went public, according to Bloomberg–sent Snap’s shares up about 40%, to $20.67 in late afternoon trading Wednesday. *

Other things to keep in mind:

• At the time of Snap’s IPO, it was one of the most richly valued Internet startups since Facebook, with a market value of $24 billion.
• Back in November, China’s Tencent, the Internet services giant, swooped in and purchased an additional 12% of the company in after hours trading.
• Snap is still not profitable. It reported a net loss of $350 million in the fourth quarter. It reported a total net loss of $3.4 billion for the full year 2017.

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