IPO Market Exhaustion Mirroring ICO Failures of 2018

The recent Uber and Lyft Initial Public Offerings reminded many investors of the wild days of the dot-com bubble. However, these elated expectations have come crashing down as of late. This year’s high-profile IPOs promised the world to investors, but despite big plans, have largely fallen flat. Uber, for example, plummeted this past Friday and continued to slip throughout the week. The stock fell 11 percent under its $45 IPO price — a massive blow to a company promoting itself as the biggest public offering of the decade. Similarly, Lyft has fallen 30 percent below its IPO price. What exactly is going on?

IPO Exhaustion From Investors

After a roaring stock market, investors were clearly greedy for higher returns. However, the recent big tech IPOs have not produced the optimism that they had hoped. Instead, the current big tech wave is being eclipsed by an unstable political situation and declining returns, making many investors too cautious to jump in. The highly-publicized IPOs of today are facing investor exhaustion. Few people are buying the hype anymore. The situation might conjure up memories of the fallen ICO market, once a sector of extreme hype and absurd returns. Yet, due to the 2018 bear market and legal uncertainty, ICOs have plummeted in funding. Many of the largest ICOs in 2018 have gone bust, and there have been few, if any, bold enough to reassert confidence in the dying market.

Transitioning from ICOs to STOs

Currently, the ICO market is trying to reinvent itself with security token offerings (STOs) — the legally-compliant variant of ICOs which promise consumer protections and trust. Perhaps IPOs will reinvent themselves in a similar vein. However, already having all institutional protections already granted, it seems difficult to imagine how they could be salvaged. The only way to save IPOs is to bring back investor confidence. However, that requires novel technologies and ideas instead of public offerings for decade-old companies. Although IPOs are nowhere as dead as ICOs, their future nonetheless seems a bit uncertain. Do you believe IPOs can reinvent themselves and reinstill confidence in investors? Let us know your thoughts in the comments below.