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Can the IPO market get any hotter?

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It’s been an IPO bonanza both here and abroad. With the vast amounts of stimulus injected into the global economy, companies have been lining up to list, with more than 40 companies scheduled to list on the ASX in just the next two months. However, with so many companies eager to raise capital, the local IPO market is becoming saturated with small-cap no-hopers. In just the last few weeks, there have been a few penny dreadfuls that have gone backwards since listing. In May and June alone, the following IPOs have gone backwards:

  • As you can see, May was a bad month for IPOs. A few have halved in value in the space of just a few weeks. For that reason, we’ve elected to look at the US IPO market and pick two mega-cap IPOs that carry a bit more fanfare than the May ASX listings

    1. Robinhood

    The millennial-oriented trading app, Robinhood, has quietly filed an initial draft of its S-1 to the SEC, on the 23 March. The listing only needs to be made public 15 days before the  highly anticipated IPO. Which means it could take place at any time, but rumours have the company gearing-up for a July listing.

    The start-up was founded in 2013 by Stanford graduates Vlad Tenev and Baiju Bhatt, but only recently gained popularity due to press coverage on retail investors who carried out the GameStop short-squeeze during the pandemic. The incident brought the app and its directors under heavy fire, bringing them to testify before Congress due to the platform’s role in the saga.

    The Robinhood app is regarded as the pioneer of zero-commission trades. By offering free trading, it ushered in a new era of trading which wasn’t confined to the wealthy. For the first time, millions of everyday Americans now had the opportunity to participate the wealth creation via the share market, without having to pay high commissions.

    Hence the name Robinhood, after the semi-legendary English outlaw who stole from the rich and gave to the poor. The app recorded explosive growth during the pandemic as homebound investors, armed with their stimulus cheques, entered the market for the very first time.  The app is the fastest growing fintech start-up and is being valued at an astronomical US$40 billion (roughly the same size as Afterpay). It’s even being compared with Coinbase, which listed earlier this year at $380. According to CNBC, “Its IPO debut is expected to garner a valuation at least three-times that amount.”

    No details have been released on the IPO, but the press is expecting all to be revealed in July. This is one to keep an eye on.

    2 – Onlyfans

    You’ve probably heard of the infamous website where celebrities, adult-film stars and even everyday folk charge obscene amounts to view their photos and videos. Even though OnlyFans has gained notoriety via its roots in the adult entertainment industry, the site wants to change its appeal and audience to focus on a broad range of celebrities and athletes. It’s also focusing on the share market via a US$1 billion IPO.

    The tech platform is profitable and does have more than 50 million registered users. Some reports say the site is growing exponentially, with some 500,000 new users per day and 15 million new users per month. And it makes sense. While the world was trapped in lockdown, OnlyFans sprang up and captured a segment of the market that otherwise couldn’t connect, i.e. the rise of the gig economy. Since then, the platform has attracted much attention.

    The members who make up the bulk of the membership are the sex workers and the adult film stars. Their live content is beamed across the globe. For example, according to medium.com, Disney actress Bella Thorne gained over 50,000 subscribers in just a week and raked in more than $2 million. If you compare that with YouTube, a July video exploring Japanese vending machines by the young YouTuber named Safiya Nygaard brought in 6.8 million views, worth $408,000. However, this is a one-off and isn’t subscription-based.

    And here’s the good news. OnlyFans’ financials are simple. For every dollar that comes through the site, OnlyFans takes up a 20% cut. Simple and easy. Especially if compared to the advertising model both YouTube and Instagram use. Forecasting cashflows is a walk in the park. According to Marketrealist, “OnlyFans made $400 million in revenue last year from its 20 per cent commission on $2 billion in sales.”

    It really is the perfect platform, filled with content creators working at home during the pandemic, pumping out content every second. And in the background is OnlyFans, comfortably collecting its 20% cut.  With no real competition, and one of the only profitable tech platforms, OnlyFans could be the next tech unicorn. The company has not confirmed or set an IPO date as yet.  




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