How Does Branding Impact a Unicorn Startup’s IPO?

Quick: if you had $100, would you invest it into Lyft, Pinterest, or Zoom? Each of these unicorn startups went public in the last few weeks, and each of their stock prices have done very different things since. Tune in as we explore why.
05/03/2019

Lyft, Pinterest, and Zoom recently went through their initial public offerings. In the weeks and days since, Lyft’s stock has plummeted, Pinterest is way up, and Zoom has wobbled a bit but is gaining ground overall.

In Lyft’s case, the company priced initial shares at $72 a piece, which would have made the company worth more than $24 billion. At the time of writing, Lyft’s stock price was currently sitting at about $57, or 21% below the IPO target.

Analysts point to heavy competition from Uber, no sign of profit anytime soon, and regulatory challenges within the transportation category as potential risks that could be dragging the price down.

For Pinterest, stock prices have risen from $24 to nearly $30 per share, which is close to a 25% increase. Despite also not being profitable, Pinterest does appear to be making strides in this category. In 2018, they increased average revenue per user in the U.S. by 47% and they cut their losses from $130 million in 2017 to $63 million in 2018.

And finally, there’s Zoom. The video communications platform opened at $62 per share, jumped to nearly $70 and has since settled down to $66 per share. Of the three startups, Zoom has the sexiest financials.  They grow 108% YoY in the fourth quarter of 2018 and is already profitable and generating cash. That’s about as good as it gets in startup land.

IPOs and Brands

IPOs are fascinating because they are one of the biggest and most important tests that a brand can face. It’s the moment where its value shifts from being determined by its customers and a handful of deep-pocketed investors to being set by the democracy of the entire stock market.

It’s the moment when the value of a company is untethered from the realities of capital and labor and can be shaped and grown on the strength of its brand.

We wanted to know more about what it takes to make it in the tech startup big leagues, so we sat down with Gia Laudi, Co-founder of Elevate & co-host of Forget The Funnel, to get her thoughts on how to turn startup brands into household names.

Tune in to the episode above to hear Gia's answers to the following questions: 

  • What are some of the biggest misconceptions people have about marketing and growth for startups?
  • How much should startups focus on their branding efforts and at what point does it become important?
  • If you had to guess which company’s stock is doing the best a year from now, would you pick Lyft, Pinterest, or Zoom and why?

Which company do you think will be doing better a year from now? What do you think the stock performance for each company says about the brands? And what do you think it means for any other unicorns looking to go public in the year ahead?

Share your thoughts with a comment and you might just win yourself some new Brandish Insights gear.

Author: Josh Braaten

CEO - Brandish Insights

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