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Investors Are Excited About Money-Losing Unicorn IPOs That Aren't WeWork


Image via Paweł Czerwiński on Unsplash

Investors will have two more money-losing unicorns to invest in as SmileDirectClub and Cloudflare are set to go public today and tomorrow, respectively.


SmileDirectClub is trying to disrupt the orthodontics industry by selling teeth straighteners directly to consumers as well as through "SmileShops." Last year, the company reported a 190% increase in sales to $423.2MM, with losses more than doubling to $74.8MM. So what does that mean? It means investors are so excited about another money-losing IPO that shares priced above initial estimates, at $23 per share, valuing the company at $8.9B.


Cloudlfare provides content delivery and internet security services to more than 20MM web properties. Apparently not all of them are approved customers, though, as they also just disclosed they may have violated laws by doing business with terrorists and narcotics traffickers. Last year, the company reported a 43% increase in sales to $192.7MM, with losses increasing more than 8-fold to $87MM. So what does that mean? You guessed right - investors can't wait to get their hands on shares. Cloudflare also raised its IPO range from $10-$12 to $12-$14, valuing the company at between $3.5B and $4.1B.


Based on how recent high-profile unicorn IPOs have traded, it's a coin flip how these two may fare. They could hit their highest level ever the day they go public such as Lyft, Slack and Chewy or hit their lowest level ever the day they go public such as Pinterest and Beyond Meat.


Leftover Crumbs

  • After breaking back above 3,000 for the first time since July at 3:59, 1 minute before the markets closed, the S&P 500 jumped further after the market closed on news President Trump is delaying tariffs on Chinese goods from October 1st to October 15th. The S&P 500 is now up almost 5.5% since CNBC aired its latest Markets In Turmoil special on August 23.

  • The campaign against vaping hit a new level with President Trump saying the FDA plans to finalize guidance that will ban the sale of flavored e-cigarettes. It may not be long before a cargo ship owned by JP Morgan is seized with both cocaine and mango-flavored Juul pods.

  • Banks manipulated LIBOR, StarKist manipulated canned tuna prices. The company was ordered to pay $100MM to settle a price-fixing scheme it participated in with rival tuna companies from 2011 to 2013.

  • Hong Kong is only a 13-hour flight from London. Hong Kong Exchanges & Clearing Ltd., owner of Hong Kong's stock exchange, made a $36.6B offer to acquire the London Stock Exchange. They are currently the world's 5th and 7th largest stock exchanges, with Hong Kong slightly larger.

  • To IPO or not to IPO. WeWork's IPO is now reportedly going to go through at a valuation of $15B to $18B, down from $47B in January. CEO Adam Neumann is losing billions by the day.