money·2 min read

What Disappointing Tech IPOs Can Mean for Your Wallet

Sep 30, 2019

The S&P 500 had a hot girl summer. Big tech companies like Lyft, Uber, and Slack had pretty much the opposite. After a LOT of hype about their IPOs (aka when a biz sells stock to regular investors for the first time), their stock prices took a nosedive.

Here’s what disappointing IPOs could mean for your wallet.

Your portfolio might’ve experienced some ch-ch-changes. According to CNBC data, almost half of the companies that went public this year are worth less today than when they debuted on Wall Street. If you invested in one of these shiny new stocks, you might’ve lost some money. Good news: economists say all these letdowns might actually lead to stricter valuations and new laws that could make the IPO market more stable. Big-picture win.

The startup world might get less fun. It’s known for high salaries, fast growth, and bring-your-dog-to-work days. But weak market performance could mean these companies have to start tightening their belts. Think: stricter PTO policies, fewer nap pods, and layoffs. Uber — which is down about 30% since its May IPO — has already shown hundreds of employees the door. Some experts think the recent pattern of big IPO flops (and sky-high valuations) could make it harder for new entrepreneurs to raise money. Making the competition even stiffer in startup land.

Products you love may get a makeunder. Shareholders make money when companies make money. Added pressure from investors could mean companies raise their prices — or cut features — to get back in the black.

theSkimm: The stock market has always had winners and losers. And lately, there have been a lot of new, um, not-winners. If you needed another reason to not put all your (stock) eggs in one you go.

Related: Learn the Language: Stock Market

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