Upstart and Wish price their debuts as the 2020 IPO cycle slows

Today we’re digging into the IPO pricing of Upstart and Wish, perhaps the final fintech and e-commerce debuts of the year. Both unicorns priced last night and will begin trading this morning.

But first, a programming note: The Exchange will publish through next Tuesday before taking a break until 2021; the last newsletter of the year will go out this weekend. And, just while we’re here, Equity will continue to drop, with some special episodes being compiled this week.

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Ok, enough with all of that! For what could be the very last time this year, let’s discuss IPO pricing and what the public market is telling us about these two offerings.

Recall that we are in the wake of three IPOs that performed so insanely well that two anticipated debuts — Affirm and Roblox — decided to delay going public until they could get more confident about their pricing. So, Upstart and Wish had bonkers pricing runs, right?

No, as it turns out.

What is this middle-of-the-road pricing?

I forgive you if you’ve gotten so accustomed to IPOs raising their range and pricing above the boosted interval that you’ve forgotten that it doesn’t always happen. Because it doesn’t always happen.

Both Wish and Upstart are examples of just such an occurrence. Here’s the data on both:

  • Wish: Priced at $24 per share, the top of its $22-$24 per share range. The company is worth a bit over $14 billion, including shares reserved for underwriters, but not including other shares that would constitute a diluted valuation. This is a win for private investors who last valued the company at $11.2 billion during an August 2019 Series H worth $300 million. Don’t cry for Wish’s only modest IPO price gains, it also raised a gross $1.1 billion in its debut. That’s a huge chunk of money at an up-valuation.
  • Upstart: Priced at $20 per share, the bottom of its $20 and $22 per share range. The company is worth a little more than $1.4 billion on a nondiluted basis. For a company last valued at around $750 million, the pricing is a win. And it raised a gross $180 million, far more than it managed in its last private round of just $50 million.

As you can tell from the tone of the above bullet points, I don’t view these pricing results as failures. To the contrary, they are huge wins from a financing perspective, adding lots of new capital at new valuation records. And each could still pop sharply and cover itself in glory.

But it does appear that the fervor we saw last week surrounding, DoorDash and Airbnb was more unique than we thought. I expected Wish to price above range. It’s an e-commerce company (hot!) and a brand name (enticing!). No dice. And Upstart is a mix of fintech and AI, two things investors have coveted on both the private and public markets in recent quarters.

It’s hard to sneer at a near doubling of Upstart’s valuation as something lackluster; I still expected more.

The good news for other unicorns is manifold. No, your pricing run won’t necessarily be impossible to anticipate. Yes, general demand for IPO shares is still active even closer to the end of the year. And, yes, even lesser-known IPOs can do well (Upstart’s lesson).

So it’s hard to read much but good news from these IPOs. The lack of outsized early enthusiasm could even been called a return to normalcy; it’s too soon to do so, but if the pattern of more relaxed debuts continues, this could be its start.