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Picking Unicorns

6/19/2015
By Charles Payne, CEO & Principal Analyst

There’s big news from the hot pool of start-ups that are changing our daily lives and creating new wealth and opportunities. First, the Fitbit Inc. (FIT) IPO was a huge hit with investors. The company started the day selling 36 million shares in order to raise $732 million and a valuation of $4.1 billion. 

Fitbit finished the session worth more than $4.1 billion. On the other hand, Airbnb Inc. (AIRBNBP) began saying it would raise a billion dollars, giving it a private market cap of $24.0 billion.

When the company goes public, it will be a hot IPO, but I have concerns. Fitbit revenues have been near $1.0 billion dollars over the past twelve months and Airbnb is reportedly going to do more than $850 million this year. Fitbit only did five rounds of funding for $66 million, while Airbnb did seven rounds after this next one for close to $2.0 billion.

Why didn’t Airbnb go public yesterday? I fear it will go public at $40 billion and will hit $60 billion on the first day… perhaps, dooming eager investors as insiders and venture capitalists cash out.

I think Fitbit management actually showed more respect for their users and potential investors than most of the bulked up unicorns as Airbnb. With that said, there are legitimate questions about how well the company will do a year or five to ten years from now. 

However, it’s a real company and it is not the sign of the apocalypse. 

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Charles Payne
Wall Street Strategies


 

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