Broken IPOs

[Saluki]

A lot of success in investing is pattern recognition.  I was listening to a podcast on the way to the gym today where the interviewee talked about a company that he missed:  Despegar.  It's an online travel company that IPO'd at $35 based on hype, then sank.  The stock went nowhere for a few years but the company was improving on every metric, then it became a multi-bagger after years of being ignored, and it's now being acquired by Prosus for $1.7bln. It's almost $20 now, but you could have bought it for less than $5 in 2023 according to Yahoo's price chart. 

 

This instantly reminded me of another busted IPO that I own a lot of: Coupang. It went public at $50, and I liked everything about it except the price.  When it got cut in half, I started buying.  12 months ago you could buy it for $14, now it's in the low $20s.  The metrics keep getting better, and other a black swan attempted coup in Korea, it's been smooth sailing. Like Despegar, it's still below the IPO price and confirms the saying that being too early is the same as being wrong. 

 

It also reminds me of Railroads, which were going bankrupt in the 1970s, but when the legislation governing rates changed, Buffett looked at it with fresh eyes and ignored the previous 100 years of bad industry economics.  It's a Bayesian calculation, I think.  

 

So, what's my point?  Despegar is going to be acquired, so it's too late for that.  I already have a large position in Coupang, so I don't need convincing there.  Do you know of any broken IPO that's down more than 50% from its debut, but doing well on things that matter (growing revenue, earnings, increasing margin, paying down debt etc.).  If so, please crowdsource them here. 

 

 

 

 

[Fly]

SPACs seem ripe for that sort of hunting. Companies get pushed to SPAC earlier than they should, wither and die quickly, but some get their stuff together and climb back up. 

[Longnose]

I do a similar thing with looking at 13F's. I have a list of people I look through their 13F's and say who go their bet wrong or more ideally they were just early and so on the delay i can follow it and the thesis works out for me because they were early and i got a better price.

 

For IPO's every now and then ill use this site. https://stockanalysis.com/ipos/2024/

Then ill just filter to whats down and start throwing them in TIKR for financials and thumbing through them for ideas. 

 

I dont do this a lot but I have done it before. RBLX was one that a while after the IPO'd it crashed and I bought and made a nice little swing trade on.  I still have a tracker position (super small) but haven't bought back in. They are about back to their IPO levels. 

 

 

[Spekulatius]

Same with spinoffs. About 80% start to sink post spinoff days.

 

I think IPO’s and spinoffs sink for good reasons but eventually it gets overdone.

[WayWardCloud]

Great thread idea!

Thanks for starting it.

 

Not the 50% down you're asking for but AirBnB and Universal Music are two wonderful companies that have IPOed 3-4 years ago at a high price and their stock has gone nowhere while business has grown.

I own both.

(much more excited about AirBnB, I wouldn't personally add to Universal at today's price)

[formthirteen]

PLBY is showing some life again. I'm not familiar with the business performance. Sometimes business performance doesn't matter:

 

Edited February 1 by formthirteen

[LC]

On 1/29/2025 at 11:26 PM, WayWardCloud said:

Great thread idea!

Thanks for starting it.

 

Not the 50% down you're asking for but AirBnB and Universal Music are two wonderful companies that have IPOed 3-4 years ago at a high price and their stock has gone nowhere while business has grown.

I own both.

(much more excited about AirBnB, I wouldn't personally add to Universal at today's price)

 

I recently sold my UMG swing trade - 22->27 or so. I think it's a good business but the stock performance never seems to reflect this.

 

On Airbnb, what do you make of VRBO? 

It is owned by Expedia, valued at 20B vs. 80B for ABNB. Slightly less of a disparity on an EV basis (41b vs. ~93b)

Expedia has other assets as well (hotels.com, trivago, etc. etc.)

[ArminvanBuyout]

Bought into TALK a few months ago - broken SPAC that pivoted business model in 2022, and seems to have turned the corner for now.

 

Also have a lot of GRAB - more the case of growing into valuations.