These aren’t businesses making kitschy t-shirts for tweens. In today’s parlance, unicorn companies refer to private companies with valuations of a billion dollars or more. Unlike their namesake, they do in fact exist. You won’t find many of them in the wild, though: As of January, there were only about 300 in the entire world.
Not surprisingly, unicorns have captured the imagination of investors and entrepreneurial aficionados. The interest in these rarities spurred us to examine what happens when unicorns go public. After scouring the Intelligize platform for data, we’re preparing to publish the results of our study in “The Unicorn IPO Report,” which will be released in full on February 26th. In the meantime, we’ll let you in on a few key details.
Unicorns might be rare, but they tend to follow the herd.
Based on our research, that’s one possible way to think about these unique companies. In a handful of ways, they demonstrate a pack-like tendency.
Consider initial public offerings. More than 30 unicorns have held IPOs in the last two years. Evidence suggests that performance of two offerings influenced the rest of the group significantly. In the first quarter of 2017, Snap went public in what was widely seen as disappointing fashion. Snap’s stock price fell almost 50 percent over the next six months, and sent other unicorns running away from the public markets. Just 11 unicorns followed suit with an IPO in the following three quarters.
A year after the Snap IPO, however, an offering from Dropbox seemingly brought the flock back. After investors greedily snatched up shares from the Dropbox IPO in the first quarter of 2018, 18 unicorns opted to go public in the next three quarters – a 50% increase from the period between the Snap IPO and the Dropbox offering. For the entirety of 2018, the number of unicorn IPOs increased 54 percent over 2017.
Although the IPO trend is one of the most dramatic, our study found other examples of unicorns’ herd mentality. For all the details on these findings, and to draw your own conclusions about these mystical creatures, check back here on February 26th for the full report.