The year 2018 was a remarkable period for the stock market, witnessing a diverse array of companies making their initial public offerings (IPOs). From tech giants to biopharmaceutical innovators, the companies that went public during this year have since experienced various trajectories, reflecting broader market trends and industry-specific developments. In this blog post, we will explore some of the most notable IPOs of 2018, analyze their performances, and discuss the lessons learned from their journeys.
The Landscape of IPOs in 2018
2018 was a dynamic year for the global economy, with events such as the partial U.S. government shutdown and escalating trade tensions between the U.S. and China. Despite these challenges, many companies seized the opportunity to go public. The year saw significant IPOs across different sectors, including technology, healthcare, and retail, with companies like Spotify, Dropbox, and Moderna leading the charge.
Notable Companies That Went Public in 2018
Spotify (SPOT)
- IPO Date: April 3, 2018
- IPO Price: $165.90
- Current Performance: As one of the most anticipated IPOs of 2018, Spotify’s direct listing bypassed traditional underwriting, a unique approach that reflected its market confidence. Initially trading at $165.90, the stock experienced volatility, peaking at over $360 in 2021 before settling below its IPO price. Despite the roller-coaster ride, Spotify remains a dominant player in music streaming, though its stock performance highlights the challenges faced by companies relying on subscription-based models in a competitive market.
Dropbox (DBX)
- IPO Date: March 23, 2018
- IPO Price: $29
- Current Performance: Dropbox’s IPO was met with enthusiasm, with shares priced at $29, 38% above the expected range. However, the company’s stock has struggled since, reflecting the intense competition in the cloud storage market from giants like Google and Amazon. As of late 2022, Dropbox’s stock was trading below its IPO price, underscoring the difficulties that even well-known tech brands can face in sustaining long-term growth post-IPO.
DocuSign (DOCU)
- IPO Date: April 27, 2018
- IPO Price: $38
- Current Performance: DocuSign, a leader in digital transaction management, had a strong start with its IPO. The pandemic-driven shift towards remote work and digital solutions catapulted the stock to impressive heights, with shares reaching over $300 in 2021. Although the stock has since cooled down, DocuSign remains a success story from the 2018 IPO class, with its current valuation still significantly above its IPO price.
Moderna (MRNA)
- IPO Date: December 6, 2018
- IPO Price: $23
- Current Performance: Moderna’s IPO was one of the most significant in the biopharmaceutical sector. While relatively under the radar at the time of its IPO, Moderna became a household name following the development of its COVID-19 vaccine. The stock saw an incredible surge, peaking at nearly $450 in 2021. Even though it has since retracted, Moderna’s shares continue to trade well above their IPO price, making it one of the most successful IPOs of 2018.
BJ’s Wholesale Club (BJ)
- IPO Date: June 28, 2018
- IPO Price: $17
- Current Performance: BJ’s Wholesale Club has been another standout from the 2018 IPO cohort. Initially priced at $17 per share, the stock has soared, reflecting strong performance in the retail sector, especially during periods of economic uncertainty. With a current trading price significantly higher than its IPO, BJ’s has capitalized on its value-driven business model, making it a favorite among investors seeking stability in retail.
Nio Inc. (NIO)
- IPO Date: September 12, 2018
- IPO Price: $6.26
- Current Performance: Nio, a Chinese electric vehicle manufacturer, entered the public market at a time of growing interest in electric vehicles (EVs). Priced modestly at $6.26 per share, Nio’s stock has seen dramatic ups and downs, closely tied to investor sentiment towards the EV sector and broader economic trends in China. Despite the volatility, Nio remains a key player in the global EV market, with a loyal investor base and ambitious growth plans.
Lessons Learned from the 2018 IPOs
- Market Timing is Crucial: The performance of companies like Spotify and Dropbox illustrates the importance of market timing and economic conditions on post-IPO success. While a strong brand can generate initial excitement, sustained performance requires navigating broader market challenges.
- Innovation Drives Long-Term Value: Companies like Moderna and DocuSign demonstrate that innovation and the ability to meet emerging needs can propel a company’s stock well beyond its initial valuation. These companies leveraged their innovative products and services to capture significant market share, particularly during the pandemic.
- Diversification of Risks: The mixed performances of the 2018 IPOs underscore the importance of diversification for investors. While some companies have thrived, others have struggled, reflecting the inherent risks associated with investing in newly public companies.
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Conclusion
The class of 2018 IPOs provides valuable insights into the dynamics of the stock market and the factors that contribute to the success or struggles of newly public companies. From the explosive growth of Moderna to the challenges faced by Dropbox, these companies reflect the diversity of opportunities and risks that come with an IPO. As we look ahead, the experiences of these companies will continue to inform investment strategies and the broader market’s approach to welcoming new entrants.
By analyzing the trajectories of these companies, investors can better understand the complexities of the IPO process and the factors that drive long-term success in the stock market. Whether you’re a seasoned investor or a newcomer to the market, the lessons from 2018 remain as relevant as ever.