Ever heard the saying, “Not every ship makes it to the harbor”? Well, the same holds for Initial Public Offerings (IPOs) as most of them went through the biggest flops in history.
In the late ’90s, there was a crazy rush of companies deciding to go public, which meant they started selling shares to the public for the first time.
Back then, just adding an “e-” before a company’s name was enough to make investors super excited, and stock prices just kept going up and up. It was like stocks were defying the normal rules!
But, as we now know from looking back in history, not every company that went public during this time had a happy ending. Some of them didn’t live up to the hype, and their stories didn’t turn out like fairytales.
In this article, we will look at the IPOs that didn’t quite hit the jackpot – the biggest flops in stock market history. So, join us as we check out the companies that had their IPO in 1999 and the ones that had the biggest flop in history.
Table of Contents
- What’s an IPO?
- What is the largest IPO in the history of the world?
- Do investors lose all their money when an IPO flops?
- Companies that had their IPO in 1999
- VA Linux Systems, Inc. (LNUX):
- Theglobe.com, Inc. (TGLO):
- eToys, Inc. (ETYS):
- Pets.com (IPET):
- Webvan Group Inc. (WBVN):
- Kozmo.com:
- Ariba, Inc. (ARBA):
- Akamai Technologies, Inc. (AKAM):
- Alibaba Group Holding Limited (BABA):
- Red Hat, Inc. (RHT):
- Foundry Networks, Inc. (FDRY):
- GlobespanVirata, Inc. (GSPN):
- Inktomi Corporation (INKT):
- Covad Communications Group, Inc. (COVD):
- Redback Networks Inc. (RBAK):
- i2 Technologies, Inc. (ITWO):
- Calico Commerce, Inc. (CLIC):
- 20+ Biggest IPO Flops in History
- Facebook (2012):
- Snap (2017):
- Alibaba Pictures (2015):
- Groupon (2011):
- Blue Apron (2017):
- Zynga (2011):
- Fitbit (2015):
- GoPro (2014):
- WeWork (2019):
- Snapdeal (2016):
- Pets.com (2000):
- Etsy (2015):
- King Digital Entertainment (2014):
- Blue Jeans Network (2011):
- Jumia Technologies (2019):
- Groupon (2011):
- Square (2015):
- Faraday Future (2021):
- Coty (2013):
- Pandora (2011):
- Conclusion
- FAQs
- References
- Recommendations
What’s an IPO?
Imagine you have a cool idea for a business, and you want to take it to the next level. You need a lot of money to make it happen, way more than your piggy bank can handle. That’s where an IPO comes in. IPO stands for Initial Public Offering.
In simple terms, it’s like throwing a big party and inviting everyone to become a part of your business journey. Instead of borrowing money from a bank or a rich uncle, you decide to sell shares of your company to the public. These shares are like ownership pieces – people who buy them become shareholders in your business.
Companies go for an IPO mainly for two reasons:
- Money, Money, Money: Hosting an IPO is like a cash bonanza for the company. When people buy those shares, the company gets a big pile of money. This cash can be used to expand the business, launch new products, or maybe just buy a really nice coffee machine for the office.
- Share the Love (and Ownership): By going public, a company opens its doors to a bunch of new owners – regular folks like you and me. This can boost the company’s reputation, attract more attention, and let everyday investors get a slice of the business pie.
So, an IPO is like a company saying, “Hey world, we’re doing something awesome, and we want you to join us on this journey. Invest in us, and let’s make great things happen together!” It’s a big deal in the business world – like the grand opening of a shop but on a global scale.
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What is the largest IPO in the history of the world?
The largest Initial Public Offering (IPO) in history was that of Saudi Aramco, the Saudi Arabian oil company.
Saudi Aramco went public on the Saudi Stock Exchange (Tadawul) in December 2019. The IPO raised around $29.4 billion, making it the biggest IPO to date.
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Do investors lose all their money when an IPO flops?
No, investors don’t necessarily lose all their money when an Initial Public Offering (IPO) flops, but the extent of losses can vary.
Here’s a breakdown:
- Immediate Losses: If an IPO doesn’t go well initially, the stock price might drop below the IPO price. Investors who bought shares during the IPO may experience an immediate loss on their investment.
- Long-Term Impact: The severity of the loss depends on various factors like the reason for the IPO’s failure, the financial health of the company, and market conditions. Some IPOs recover over time as the company addresses its issues, while others may struggle for an extended period.
- Individual Investor Decisions: Whether an investor loses money also depends on their individual decisions. Some may choose to sell their shares quickly to limit losses, while others might hold on with the hope of a recovery.
- Risk Management: Investing always carries risks, and IPOs, in particular, can be volatile. Investors are encouraged to diversify their portfolios, conduct thorough research, and carefully assess the potential risks and rewards before investing in any IPO.
While investors may face losses if an IPO doesn’t perform well initially, the ultimate outcome depends on various factors, including the company’s ability to recover and individual investor decisions. It’s a reminder of the inherent risks involved in the stock market.
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Companies that had their IPO in 1999
VA Linux Systems, Inc. (LNUX):
VA Linux Systems was a company that specialized in Linux-based computer systems and servers. The IPO was one of the most notable during the dot-com boom, and the stock experienced a significant first-day gain.
Theglobe.com, Inc. (TGLO):
Theglobe.com was a social networking website that gained attention during the late 1990s. The company’s IPO was one of the earliest internet IPOs, and its stock price soared on the first day of trading.
eToys, Inc. (ETYS):
eToys was an online toy retailer that went public in 1999. The company’s IPO generated a lot of hype, but it faced challenges and eventually went bankrupt during the dot-com bust.
Pets.com (IPET):
Pets.com was an online pet supply retailer with a memorable sock puppet mascot. The company went public in 1999 but faced financial difficulties and became one of the prominent failures of the dot-com era.
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Webvan Group Inc. (WBVN):
Webvan was an online grocery delivery service that aimed to revolutionize the grocery industry. Despite a high-profile IPO, the company faced operational challenges and eventually went bankrupt in 2001.
Kozmo.com:
Kozmo.com was an online delivery service for a variety of goods, including DVDs and snacks. The company went public in 1999 but faced financial difficulties and ceased operations in 2001.
Ariba, Inc. (ARBA):
Ariba was a business-to-business e-commerce company that provided solutions for procurement and supply chain management. The company’s IPO in 1999 was successful, and it played a significant role in the B2B e-commerce space.
Akamai Technologies, Inc. (AKAM):
Akamai Technologies is a content delivery and cloud service provider. The company went public in 1999 and has since become a key player in the content delivery network (CDN) industry.
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Alibaba Group Holding Limited (BABA):
While Alibaba’s initial public offering (IPO) was in 2014, it’s worth mentioning as a notable company in the tech space. Alibaba is a Chinese multinational conglomerate specializing in e-commerce, retail, internet, and technology.
Red Hat, Inc. (RHT):
Red Hat is an open-source software company that went public in 1999. The company is known for its enterprise Linux products and has played a significant role in the open-source software movement.
Foundry Networks, Inc. (FDRY):
Foundry Networks was a networking hardware manufacturer that went public in 1999. The company specialized in high-performance switches and routers and played a role in the development of networking technologies.
GlobespanVirata, Inc. (GSPN):
GlobespanVirata was a semiconductor company that focused on providing solutions for broadband communications. The company’s IPO in 1999 reflected the growing demand for technology related to high-speed internet access.
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Inktomi Corporation (INKT):
Inktomi was a software company that developed internet infrastructure and search engine technologies. The company went public in 1999 and played a role in powering search engines and content delivery systems.
Covad Communications Group, Inc. (COVD):
Covad was a telecommunications company that specialized in providing high-speed internet access services, particularly through Digital Subscriber Line (DSL) technology. The company’s IPO in 1999 capitalized on the growing demand for broadband services.
Redback Networks Inc. (RBAK):
Redback Networks was a telecommunications equipment company that focused on developing solutions for broadband access and routing. The company’s IPO in 1999 was well-received as it addressed the increasing need for high-speed internet infrastructure.
i2 Technologies, Inc. (ITWO):
i2 Technologies was a supply chain management software company that went public in 1999. The company’s solutions aim to optimize and streamline various aspects of supply chain operations for businesses.
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Calico Commerce, Inc. (CLIC):
Calico Commerce was a software company that specialized in providing e-commerce solutions for businesses. The company’s IPO in 1999 was part of the broader trend of companies capitalizing on the growing interest in online commerce.
20+ Biggest IPO Flops in History
Facebook (2012):
Despite being a social media giant now, Facebook had a rocky start due to technical glitches and overvaluation during its IPO. Sadly, they had one of the biggest IPO flops in history.
Snap (2017):
Snapchat’s parent company, Snap Inc., faced challenges after going public, with slowing user growth and increasing competition.
Alibaba Pictures (2015):
The entertainment arm of Alibaba had a disappointing IPO due to concerns about its profitability and strategic direction. Unfortunately, they had one of the biggest IPO flops in history.
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Groupon (2011):
The daily deals platform Groupon faced skepticism about its business model, leading to a decline in its stock price after the IPO.
Blue Apron (2017):
Blue Apron, a meal kit delivery service, struggled post-IPO due to increased competition and operational issues. They still have one of the biggest IPO flops in history.
Zynga (2011):
Known for popular online games, Zynga faced challenges after its IPO, with concerns about user engagement and monetization.
Fitbit (2015):
Fitbit, a fitness tracker company, experienced a decline in its stock value post-IPO amid competition and concerns about market saturation.
GoPro (2014):
The action camera company GoPro faced difficulties after its IPO due to market saturation and increased competition.
WeWork (2019):
WeWork’s IPO plans fell apart amid governance issues, financial losses, and scrutiny over its business model. They had one of the biggest IPO flops in history.
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Snapdeal (2016):
An Indian e-commerce platform, Snapdeal’s IPO plans faced challenges due to intense competition and struggles with profitability.
Pets.com (2000):
An iconic example from the dot-com era, Pets.com faced rapid failure post-IPO due to a flawed business model and high operating costs. It is one of the most iconic companies that had their IPO and failed.
Etsy (2015):
After its IPO, the online marketplace for handmade and vintage goods, Etsy, struggled as concerns about competition and profitability arose. Etsy has had one of the biggest IPO flops in history.
King Digital Entertainment (2014):
The creator of the popular mobile game Candy Crush, King Digital, faced challenges post-IPO due to concerns about the sustainability of its gaming model.
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Blue Jeans Network (2011):
The video conferencing company, Blue Jeans Network, experienced difficulties post-IPO amid increasing competition in the tech sector.
Jumia Technologies (2019):
Often referred to as the “Amazon of Africa,” Jumia faced skepticism and a decline in stock value post-IPO due to concerns about its business practices and profitability.
Groupon (2011):
Groupon, known for its daily deals, faced challenges post-IPO due to questions about its accounting practices and long-term sustainability.
Square (2015):
Despite being a successful payment processing company now, Square initially faced skepticism about its ability to generate profits after going public.
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Faraday Future (2021):
The electric vehicle startup Faraday Future faced a challenging IPO due to concerns about its financial stability and production capabilities.
Coty (2013):
The beauty and cosmetics company Coty struggled post-IPO due to challenges in integrating acquisitions and shifting consumer trends.
Pandora (2011):
The music streaming service Pandora faced difficulties post-IPO as competition in the streaming industry intensified, impacting its market share.
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Conclusion
So, there you have it. Behind every soaring success, there’s a tale of resilience and lessons learned from the times things didn’t quite go as planned. These stories remind us that even in the financial world, where dreams of fortune are high, not every launch leads to the moon.
The stock market is a wild sea, and not every ship reaches the treasure island. Here’s to the companies that dared to sail, even if they ended up with a bit of seaweed instead of gold.
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FAQs
An IPO is like a company’s grand debut on the stock market. It stands for Initial Public Offering. Companies go for it to raise money by selling shares to the public.
IPOs can flop due to a bunch of reasons – overhyped expectations, poor financial health, or sometimes, the company just isn’t ready for the wild world of the stock market. It’s like planning a big party, but nobody shows up.
One contender for the title is the Facebook IPO in 2012. It was expected to be a blockbuster, but technical glitches and overvaluation caused a rocky start. Eventually, it recovered, but it made quite a splash.
Yes, small fish can join the IPO party too! But sometimes, it’s like trying to catch a cab in the rain – a bit tricky. Big institutional investors often get first dibs, and the leftovers are for the smaller folks. So, it’s a mix of strategy and luck!
References
- sofi.com– companies that had their IPO in 1999
- money.howstuffworks.com– 10 biggest IPO flops
- huffpost.com– 10 biggest IPO failures
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