If approved by Twitter shareholders, it would reportedly be the largest deal to take a company private in at least two decades.

So what does it all mean? 

What happens when a company goes private?

Going private is the opposite of when a company goes public, or has an initial public offering. That’s when a private company lists on a public exchange, such as the New York Stock Exchange. Twitter, for example, went public on the Nasdaq in 2013.

Companies generally go private when another company makes a bid for the company’s shares. Executives of the company might also make a decision to take the company private, and buy the outstanding stock from shareholders.

When a company goes private, its shares are delisted from an exchange, which means the public can no longer buy and sell the stock. The company may offer existing investors a price for their shares that may be above the current level.

In recent weeks,  Musk purchased a 9.2% stake in Twitter, with 73.4 million shares worth $2.89 billion, making him one of the company’s largest shareholders. Musk initially said he would join Twitter’s board, but backed out. 

Some analysts considered Musk’s offer an attempted hostile takeover.  In response, company management deployed a “poison pill.” Poison pill is a phrase used to describe a limited duration shareholder rights plan effectively lowering the value of the shares held by the person trying to take over a company. 

Why would Twitter go private?

Private companies don’t have the same level of scrutiny that public companies do.

When companies are public, they must file quarterly earnings reports with the Securities and Exchange Commission (SEC). These reports are filled with details about the company’s profit (or lack of it), revenue, debts, and changes to management, among many other details.

Private companies are not required to file these reports.

By going private, a company can often avoid regulatory scrutiny and the need to make public filings about its hits and misses. And that may be at least one motivation for Musk to take the company private

Musk, who has approximately 80 million Twitter followers, has a complicated history with the social platform. In 2018 his tweets figured prominently in a complaint brought by the Securities and Exchange Commission (SEC), which ruled Musk made fraudulent claims about taking Tesla private.

In a statement from Twitter announcing the sale on Monday, Musk wrote:

“Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” said Mr. Musk. “I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans. Twitter has tremendous potential – I look forward to working with the company and the community of users to unlock it.”

Additionally, by taking the company private, Musk could make changes to the platform with less oversight from investors, regulators, and others.  He could, for example, avoid the Senate hearings in 2021 when chief executives from Facebook, Google and Twitter all stood publicly answering questions about how their platforms handle the spread of misinformation and extremism. 

Going forward Twitter may feel less pressure to provide the public and politicians with answers as to how it conducts its business.

Have other companies gone private?

Yes, recent examples include computer maker Dell, ketchup manufacturer H.J. Heinz, and the supermarket chain Safeway. Musk proposed taking his electric vehicle company Tesla private in 2018.

Good to know

It’s important to realize that many management teams that intend to take their companies private often don’t. British drugstore chain Walgreens Alliance Boots, for example, failed to reach an agreement with private equity investors for a multi-billion buyout deal in 2019. 

The post What Does it Mean When a Company Goes Private? appeared first on Stash Learn.

There were more IPOs led by women in 2021 than ever before, topping 2020’s total of four women-led public offerings, which was a record at the time. Women-helmed IPOs in 2021 included:

• Dating app Bumble went public under Whitney Wolfe Heard in February 2021. 
• In May 2021, health care clothing company FIGS, led by two women, held its IPO.
• Actress Jessica Alba also took her consumer goods business The Honest Company public in May. 
• During the same month, Vimeo CEO Anjali Sud conducted the video platform’s IPO. 
• Clothing rental company Rent the Runway, created by Jennifer Fleis and Jennifer Hyman, went public in October 2021.

While it’s exciting to celebrate women breaking new ground, women still led a small percentage of the more than 1,000 companies that went public in 2021. I can’t stop myself from wondering: Why do so few IPOs come from companies run by women? 

“Homosocial reproduction,” says Elizabeth J. Sandler, founder and chief executive officer of executive coaching, solutions, and design company Echo Juliette, based in New York. She adds that Rosabeth Moss Kanter, a professor of leadership and strategy at Harvard Business School, created the term in 1977, and it is what still dominates business today.  

“It is the principle that we are most comfortable working with people who are socially similar to ourselves,” Sandler says. “Because corporations are run mostly by men, investors are mostly men and therefore founders of companies taken public are mostly men.”

Sandler says when the pandemic first hit and caused travel and meeting cancelations, her calendar had more than 100 meetings with investors, tech founders, and senior executives. All of them were men. 

Big challenges for women-led companies 

Other statistics bear witness to this trend: Only .64 percent of venture capital money has gone to companies with Black or Latinx women founders since 2018, according to one recent study of minority women in business. Women-led startups also consistently get under 3 percent of all venture capital funding. In 2021, women start-up founders received 2% of venture capital, the smallest amount since 2016. And more generally, some women may experience a  motherhood penalty, workplace sexual harassment, which goes unreported 75 percent of the time, even the feeling some women reported to this writer about being “pushed out” by their male peers.

Still, mentoring programs, concerted efforts by companies to address gender discrimination, and, of course, incredibly talented women are helping change the game.  

Groundbreakers of the past two years

In 2021, founder and chief executive  of the dating app Bumble, Whitney Wolfe Heard, became the youngest-ever woman to lead her company to an IPO in February, 2021. She is 31, and her company was valued at $8 billion. Meanwhile, Anjali Sud was the first South Asian woman to take a business public when Vimeo joined the Nasdaq. 

2021’s strong start follows 2020, when Leen Kawas, founder of the pharmaceutical company Athira Pharma, was the first woman to take her company to an IPO in the state of Washington in more than 20 years. Roni Mamluk guided Ayala Pharmaceuticals through an IPO the same year, when the company was valued at $10 billion. In Michigan, Ann Marie Sastry took her A.I. software company Amesite through an IPO in September. And rounding out the 2020 foursome was Maria L. MacCecchini, whose drug company works to cure Alzheimer’s and Parkinson’s disease, and had its IPO last January. 

“We are catching up to progress, but it just takes time,” says Lindsey Allard,  CEO and Co-Founder of PlaybookUX, a user experience testing company in New York. “The more women who take that leap and become a leader or founder are pushing things forward a little bit more.”

The post Why So Few Women Have IPOs appeared first on Stash Learn.

*Stash is not endorsing any of the IPOs mentioned below. Stash does not offer the ability to participate in IPOs and encourages you to research any company yourself prior to investing. This calendar is for informational purposes only and is not a recommendation of any security. Stash is under no obligation to offer any investment listed on its platform. Following an IPO, the price of the newly issued stock can move significantly, so it’s especially important to remember the Stash Way®.

Updated December 21, 2021

November 17

Iris Energy Ltd., IREN

• The Bitcoin mining company builds, owns, and operates data and electrical infrastructure to facilitate the mining of Bitcoin. Iris Energy, which is based in Sydney, Australia, sold 8.3 million shares for a price of $28 per share. 

Sono Group NV, SEV

• The car manufacturer makes cars powered by solar energy, particularly its Sion model, which is an electric car powered by solar. Based in Munich, Germany, Sono Group sold 10 million shares for $15 each. 

November 18

Sweetgreen Inc., SG

• The restaurant chain,  based in Los Angeles, California, offers fast, healthy food options. With 140 locations across 13 states and Washington, D.C., Sweetgreen sold 13 million shares for $28 each. 

December 9, 2021 

HashiCorp Inc., HCP

• The computer programming services company provides infrastructure for public and private cloud services. Based in San Francisco, California, HashiCorp sold 15.3 million shares at $80 each. 

Nu Holdings Ltd., NU

• The Grand Cayman, Cayman Islands-based digital banking company has 48.1 million customers in Brazil, Mexico, and Colombia as of September 30, 2021. Known for its credit card offerings, Nu sold 289.2 million shares for $9 per share. 

December 15, 2021

Samsara Inc., IOT

• The cloud analytics platform helps companies in a variety of industries, including transportation, wholesale and retail trade, health care and manufacturing to improve operations by analyzing data from the Internet of Things (IoT) and other disconnected systems. Based in San Francisco, California, the company sold 35 million shares at $23 each. 

Upcoming IPOs

December 22, 2021

Cerberus Cyber Sentinel Corp., CISO

• Based in Scottsdale, Arizona, the cybersecurity and compliance company is being uplisted to the NASDAQ from OTCQB. Cerberus offers consulting services, software, and solutions for securing data and financial information. The company expects to sell 2 million shares at $5 each.

Information about IPOs

Companies begin trading on a public stock exchange through a process called an initial public offering (IPO). 

A company might go public to raise money to expand the company, to build new locations, or hire more people. Going public can allow the company to raise a lot of money quickly. 

When a company decides to go public, it’ll work with an investment bank such as Goldman Sachs or J.P. Morgan in a process called underwriting. The bank will make sure all of the proper documents are prepared and find people who want to invest in the company through initial shares or IPO shares. Before the company goes public, it must file with the Securities and Exchange Commission (SEC), which is a federal agency in charge of regulating the company and keeping the company informed on those regulations and rules. Once the company goes public with SEC approval, it has to issue quarterly financial statements on the health of the company so that investors can stay informed. 

Although it’s a less common approach to going public, a company can also choose to take its stock public through a direct listing.The company is still required to file with the SEC, but  when a company lists shares directly, it doesn’t use a bank to go public. Instead, early investors in the company choose to sell their shares to the public. A direct listing allows the stock exchange to dictate the price of shares. By contrast, with a traditional IPO, the bank that underwrites the IPO will set an initial share price. 

Good to know: 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 post Stash’s December 2021 IPO Calendar appeared first on Stash Learn.

So what’s a SPAC? Simply put, it’s a shell company with no operations of its own, typically set up by wealthy investors or hedge funds, that goes public, lists on an exchange, and then acquires or merges with a functioning private company. That company becomes public through the merger, since the shares of the SPAC are already publicly traded. By using this structure, companies can potentially save time, and millions of dollars in legal, listing, and underwriting fees to go public.  

SPACs are sometimes referred to as “blank check” companies, because the initial investors raise funds before choosing a company to acquire, and retain a lot of leeway in choosing the company they will acquire. Billionaire hedge fund investor Bill Ackman reportedly raised $4 billion, for example, to purchase an as-yet unidentified company, and reportedly has a list of 150 potential companies his fund is examining as targets. Note: The search for a company may continue even after the SPAC lists on an exchange, and is open to new investors, which can make the investment more risky than a more traditional investment. 

Investing in SPACs carries special risk

Here’s the catch though: A SPAC must acquire or merge with another company within two years, or the SPAC is dissolved and the money is returned to investors.

Investing in SPACs also carries plenty of risks. Although celebrities such as Richard Branson and Bill Ackman are using SPACs for IPOs, SPACs used to be a last-resort way to enter public markets and were typically associated with troubled companies and fraud. 

There are other things to look out for. Retail investors—meaning the average person—who buys into a SPAC, may be doing so based solely on the sponsor’s resume, rather than on a business’s history, value, or other merits. Additionally, even once a deal is announced, investors may not have as much information as they would for a company that follows the normal route for an IPO. 

Additionally, SPACs have their own managers and executives, not to mention shareholders, which means the company it purchases may have to hand over control to executives that may be different from the ones who launched and have the most knowledge of the company. 

The popularity of SPACs comes and goes. In fact, the last time they saw this much activity was in the lead up to the financial crisis in 2009, according to Bloomberg.

Investing is associated with risks. Understand your financial circumstances, risk tolerance, and investment goals to identify if investing in SPACs is suitable for you.

The post What’s a Special Purpose Acquisition Company (SPAC)? appeared first on Stash Learn.

DoorDash in particular has seen success during the pandemic. The company had its initial public offering (IPO) on December 9, 2020, raising $3.4 billion in one of the biggest capital raises from a public offering of the year, and valuing the company at $72 billion. 

Online food delivery reportedly services generated $26.5 million in revenue in 2020, a more than 20% increase from 2019. DoorDash leads the industry with a market share of 37%, followed by GrubHub at 31%, Uber Eats at 21%, and Postmates at 10%. 

Unlike some food delivery services such as Uber Eats or GrubHub, Doordash provides restaurants with the software to fulfill orders from customers, as well as access to local customer marketplaces. Doordash also accesses many smaller locations—such as the suburbs and smaller cities—that other services have overlooked, according to venture capital firm Goodwater Capital*.

The decline in restaurant dining has potentially helped DoorDash, according to Goodwater. Since the beginning of the pandemic, DoorDash’s Gross Order Value (GOV) has increased two to three times. And in a survey conducted by the venture capital company, 52% of respondents said that they had ordered food delivery since the pandemic began. 

And even as dining out returns, consumers are likely to continue ordering delivery with services like DoorDash. Seventy-four percent of people Goodwater surveyed said that they would not stop ordering delivery if dining out returned to pre-pandemic levels. However, DoorDash faces stiff competition from competitors like Uber Eats, GrubHub, Resy, and more. Remember that all investing involves risk and that past performance doesn’t guarantee future growth. 

You can find more information on the DoorDash IPO here.

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. 

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 DoorDash 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 DoorDash Goes Public. Here’s What You Should Know About the Company. appeared first on Stash Learn.

Context, which operates the online shopping site Wish, went public on December 16, 2020, reportedly raising approximately $1 billion from the offering, which valued the company at $17 billion. Wish reportedly connects 500,000 merchants to 100 million customers around the world each month. 

And its concept is novel: to serve less affluent consumers, by giving them online access to non-name-brand goods with discounts up to  80% to 90%. It’s something of an anti-Amazon strategy, as the digital commerce giant typically provides its deepest discounts and free shipping for consumers who can afford the annual $129 a year for a Prime membership.

With this in mind, Wish tends to focus on geographic areas of the U.S. where income disparity is the greatest, according to research from venture capital firm Goodwater Capital*. Those areas include the Southeast, as well as states such New York and California, homes to Wall Street and Silicon Valley, respectively. 

Here are some other details about Wish, from Goodwater:

• Wish focuses on consumers with income less than $50,000 annually.

• According to a recent survey of Wish customers, 75% prioritize the price of an item over brand and delivery time. Additionally, 95% of the survey participants who shop on Wish said they find items on Wish to be at a discount to branded alternatives.
• The average order size for a wish customer is $22 to $25
• The site’s most popular items are electronics and apparel.

The e-commerce world is dominated by multi-billion dollar companies including Amazon, which controls nearly 40% of online sales, and increasingly by traditional brick-and-mortar companies such as Walmart and Target, which also focus on discount-oriented consumers in search of  low-cost products. 

You can find out more about Wish here. 

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. 

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 ContextLogic 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 Find Out More About ContextLogic’s IPO appeared first on Stash Learn.