This year has been a rude awakening for IPO investors, and on Monday, I went over a couple of the recent broken debutantes that won’t be bouncing back anytime soon. Now it’s time to take a look at some of the nearly 50 IPOs trading below their initial prices that have a better shot at clawing their way higher in the year ahead…
Lyft (NASDAQ:LYFT), Fiverr (NYSE:FVRR), and DouYu International (NASDAQ:DOYU) have all buckled below their initial offering prices, but brighter days should be ahead. All three stocks aren’t for the timid. They are riskier than even most IPO investments. The payoff could be juicy if they come back into favor.
The country’s second-largest ridesharing platform is stepping on the gas. Revenue soared 72% in its latest quarter, as millennials forgo costly auto ownership in favor of app-based ride-hailing. Lyft is growing faster than the country’s largest player — another broken IPO — and it also hasn’t followed Uber (NYSE:UBER) into the cutthroat restaurant-delivery niche or outside of North America.
Lyft and Uber are scaring investors away with their 10-digit annual deficits, but there’s no denying that this is a niche that’s only growing in popularity. Lyft and Uber have a duopoly here, and things will get better once they feel that they don’t have to spend so much on promoting their apps. Regulatory risks remain, and the price of doing business in California is about to get more expensive. Lyft is still growing too quickly to ignore now that it’s selling 43% below its springtime IPO price of $72.
It’s not just Lyft cashing in on the gig economy, but failing to deliver for investors. Fivver pairs up buyers with sellers of digital services, and true to its name, these one-off jobs used to cost just $5 apiece. Fiverr’s platform has gotten more sophisticated over the years and, with that, access to higher-paying tasks.
Revenue rose 41% in Fiverr’s latest quarter, a refreshing combination of a 14% increase in active buyers (now at 2.2 million folks), a 16% pop in average spend ($157 per active buyer), and a widening take rate for the platform operator. Fiverr continues to expand the digital services it offers, and losses will be the norm through the next few years.
All three of the comeback candidates in this article traded above their IPO prices at one point, and Fiverr had the biggest initial pop. The stock traded as much as 90% higher on its first day of trading. All of those gains are naturally more than gone, but Fiverr’s gig marketplace is gaining traction even if it sees revenue growth slowing to between 30% and 35% for the third quarter…
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