2019 was the year of great expectations for unicorn startups and their public market debuts. It was also the year when some of the most highly anticipated IPOs did not live up to those expectations.

Thanks to their disappointing performances out of the gate as public companies, many of the tech industry's biggest darlings (looking at you, Uber and Lyft) are now seen as cautionary tales about the dangers of prioritizing growth over profits. And the startup community is responding in kind, with companies like Palantir and Postmates postponing their own public exits. In October, Postmates CEO Bastian Lehmann explained the delay arguing the public markets were "a little choppy" for growth companies. SoftBank, the Japanese conglomerate fueling the trend of mega funding rounds, is also pushing its portfolio startups to get out of the red

An initial public offering is but a single step in a company's journey, yet the market's initial reception still matters. Read on for a short list, in chronological order, of some of the biggest IPO disappointments in 2019. 

1. Super League Gaming

Co-founded by David Steigelfest and John Miller in 2014, this e-sports company organizes tournaments for amateur gamers. Now led by CEO Ann Hand, the unprofitable business went public in February, reporting a little over $1 million in revenue for 2018 and a $20.6 million net loss. The Santa Monica, California-based company raised nearly $25 million in its IPO, becoming the first venture-backed e-sports startup to go public in the U.S.

However, its first trading day on the Nasdaq was rocky. Shares tumbled below the $11 IPO share price, and the stock has continued to decline by nearly 80 percent. Currently, the company's market cap is hovering at $23 million.

2. Lyft

In March, Lyft became the first venture-backed ridesharing company to hit the public market--trading on the Nasdaq at a $20.5 billion market cap, well above its $15 billion pre-IPO valuation. At first, its public debut looked like a runaway success: Shares soared and closed 8.7 percent above its $72 IPO share price. While the gains made co-founders Logan Green and John Zimmer millionaires (not billionaires), the celebration didn't last long. The stock began to falter on its second trading day and dropped nearly 20 percent within two weeks. At presstime, Lyft's market cap was around $14 billion.

3. Uber

While Travis Kalanick was unceremoniously ousted following a string of scandals that plagued the company he co-founded with Garrett Camp, he still added billions to his net worth after Uber debuted on the New York Stock Exchange in May. Multiple reports suggested Uber was considering an IPO valuation as high as $120 billion, but tepid enthusiasm forced it to pare its valuation back significantly to about $82 billion. On opening day, the stock traded below its $45 IPO price, and for the most part, has continued to do so. After the lockup period expired in November, allowing employees and insiders to sell their shares, the stock plummeted even further to a record low of $25.58 per share. Still, CEO Dara Khosrowshahi has promised investors the company will achieve profitability by 2021. Currently, Uber's market cap is $51 billion.

4. SmileDirectClub

After scaling their direct-to-consumer dentistry startup to more than $423 million in revenue in 2018--and earning a spot on Inc.'s 2017 30 Under 30 list--co-founders Jordan Katzman and Alex Fenkell took their company public in September. The still-unprofitable company priced its shares at $23 for its debut on the Nasdaq, a dollar above its proposed range, valuing the business at around $8.85 billion. When it began trading, however, the stock tumbled and ended up closing nearly 28 percent below its IPO price. It was the worst IPO debut in two decades among companies raising more than $500 million, according to a report from research firm Dealogic. Amid its troubles, SmileDirectClub is also fighting several legal battles against some state dental boards that oppose its business model of selling dental aligners based off a 3-D scan of your teeth (instead of X-rays) and a do-it-yourself dental impression. Now its market cap has sunk to $3 billion, which is below its last private valuation of $3.2 billion a year ago.

5. Peloton

The New York City-based maker of upscale stationary bikes and treadmills also started trading on the Nasdaq in September. With a $29 IPO share price that valued the unprofitable company at $8.1 billion, Peloton nearly doubled its last private valuation of $4.15 billion. However, the stock opened below that price and continued to fall nearly 30 percent throughout the following weeks. One thing that baffled many investors was co-founder and CEO John Foley's claim that Peloton was "weirdly profitable" in 2018 when its financial disclosures showed that it clearly wasn't. Still, the tide may be turning for the seven-year-old company. In November, billionaire investor George Soros revealed he had added the stock to his portfolio, prompting the price to surge. The company's market cap is currently hovering above its IPO valuation at around $8.7 billion.

6. WeWork

WeWork, of course, never went public. To recap the company's no good, very bad year: WeWork raised $6 billion from SoftBank in January at a $47 billion post-money valuation. By late summer, WeWork's parent company unveiled an IPO prospectus declaring its intentions to list on the Nasdaq at an undetermined valuation but presumably higher than its last financing round. The filing also revealed staggering losses and co-founder and then-CEO Adam Neumann's history of questionable transactions, including selling his own company the trademark for the word we for nearly $6 million. Despite reportedly considering an IPO valuation as low as $10 billion, the company ended up shelving the effort indefinitely. Facing insolvency, the startup received a $9.5 billion infusion of cash from SoftBank in October. Neumann was ousted from the company with a $1.7 billion golden parachute and SoftBank appointed one of its own executives, COO Marcelo Claure, as executive chairman to "right-size" the business. Layoffs are currently under way, and the company's valuation has plummeted to below $8 billion.  

7. Endeavor

The talent agency behind the Miss Universe Pageant and the UFC initially unveiled its IPO prospectus in late May. The filing revealed that after years of losses, the company co-founded in 1995 by CEO Ariel Emanuel achieved profitability last year. It also showed the company owed about $4.6 billion in long-term debt as of June 30. The company pulled the plug one day before it was supposed to start trading on the New York Stock Exchange. In October, Endeavor formally withdrew its IPO.  

Published on: Dec 17, 2019