It might be tempting to consider that performance as evidence of a bubble forming for startup companies that want to make their debut on Wall Street. Pinterest, Slack, Airbnb and Lyft rival Uber have all signaled an intent to go public this year.
That behavior is a stark contrast to how investors acted 20 years ago, when much smaller tech startups were all the rage on Wall Street.
IPOs in 1999 were smaller and bleeding red ink
An unprofitable software company named VA Linux still holds the record for the largest one-day gain for an IPO. Shares skyrocketed nearly 700% on its debut day in December 1999.
That valued the company at $1.6 billion even though VA Linux had annual sales of only $17.8 million.
VA Linux inherited the biggest one-day IPO title from theglobe.com, a web portal that surged more than 600% on its first day of trading in November 1998.
Theglobe.com soared even though it had reported revenue of just $1.2 million in the first half of 1998. Not billion. Million. And the company also had posted a net loss of $5.8 million.
These are just two of many tech and dot-com companies from the late 1990s and early 2000s that posted triple-digit percentage gains on their first days of trading.
Companies with names like WebMethods, Cache Flow and Crayfish all soared more than 400% when they went public.
No signs of a bubble here
It doesn’t even feel like earlier this decade, for that matter.
So the fact that Lyft didn’t go bonkers when it began trading might be a good thing. It shows that investors aren’t going to fall for unprofitable unicorns just because they have a lot of buzz.
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