The number of companies engaged in initial public offerings (IPOs) in the U.S. in 2018 far surpassed rates in 2017 and 2016. The first three quarters of the year brought about 173 IPOs, raisinga combined $45.7 billion. This value raised figure was nearly 47% higher than the value raised by IPOs in the first three quarters of 2017, and it was a whopping three times that for the same period in 2016. Most IPOs in 2018 were for technology, media and telecom companies or biotech names.
What made 2018 such a great year for IPOs? The majority of the year saw very strong market conditions overall, which many companies likely viewed as an ideal time to go public. Corporate earnings set records for the second quarter as S&P 500 companies earned an average $38.65 per share. Consumer confidence reached its highest levels in nearly 20 years by September. Of course, the final weeks of the year erased the gains of the previous several months in the market and sent the S&P into losses for 2018 overall. Nonetheless, the large majority of companies going public in 2018 had already completed that process by the time the situation turned.
Below, we'll explore some of the biggest IPOs of 2018 in terms of overall size of launch. We'll compare their performance to the S&P 500 as a benchmark, which saw an average of -4.4% returns.
1. Spotify Technology S.A. (SPOT)
IPO size: $9.2 billion
Performance for 2018: -23.8% (SPOT)
2. AXA Equitable Holdings, Inc. (EQH)
IPO size: $2.7 billion
Performance for 2018: -17.2% (EQH)
3. PagSeguro Digital Ltd. (PAGS)
IPO size: $2.3 billion
Performance for 2018: -35.9% (PAGS)
4. iQiyi, Inc. (IQ)
Sector: Consumer goods
IPO size: $2.3 billion
Performance for 2018: -4.4% (IQ)
5. Pinduoduo, Inc. (PDD)
IPO size: $1.6 billion
Performance for 2018: -16.0% (PDD)
Spotify Technology S.A.
The largest IPO both in terms of overall size and in terms of investor anticipation was for Swedish music streaming service Spotify Technology S.A. (SPOT). However, the unusual method of going public makes Spotify's IPO a bit difficult to categorize. The company decided on a direct listing, a sort of "non-IPO", where the company sells shares directly to the public and without any brokers or banks to act as intermediaries. Essentially, the process allowed all existing investors, including employees of the company, to sell their shares to the public, and no new shares were issued in the process. Some estimates for the size of the IPO ranged up to nearly $30 billion, but in all likelihood the total offering was much smaller.
AXA Equitable Holdings, Inc.
Raising more than $2.7 billion, AXA Equitable Holdings, Inc. (EQH) logged the second-largest IPO of the year. The company represents the American operations arm of the French insurance company AXA SA. Even given the massive haul, the AXA IPO reportedly fell short of its targeted share sale. Per Bloomberg, the proceeds gained from the IPO were to be used for a major acquisition in which Axa SA would take over XL Group Ltd.
PagSeguro Digital Ltd.
Brazilian payment services company PagSeguro Digital Ltd. (PAGS) earned an estimated $2.3 billion in its IPO in January of 2018. The company offered more than 105 million shares at $21.50 each. PagSeguro, founded in 2006, is a major payment services company for small businesses across Brazil. It has set as one of its primary goals the support of digital payment infrastructure to allow for e-commerce to continue to grow in Brazil.
Raising just slightly less than PagSeguro was Chinese video streaming service iQiyi, Inc. (IQ). The company earned about $2.3 billion through its IPO in March. However, the company's share price dropped significantly immediately after the offering. Nonetheless, IQ stock was the most stable of all of the companies on this list; by the end of 2018, it had fallen by just 4.4%.The Chinese Netflix competitor is a subdivision of Baidu, the producer of China's largest search engine. Although Baidu has now spun iQiyi off into its own entity, it retains majority ownership of the video streaming platform, so it will continue to guide the company's path into the future.
In July, another Chinese company launched a successful IPO in the U.S., earning it a spot among the biggest public offerings of 2018. Pinduoduo IPO'd at $19 per American depositary share. As a result, the company raised more than $1.6 billion in its public offering. Pinduoduo is an online group discounting company which offers customers the chance to group together in order to earn greater discounts from a variety of merchants. Pinduoduo managed to outpace other popular and highly-anticipated Chinese-U.S. public offerings in 2018, including the October IPO of Tencent Music Entertainment. Tencent earned about $1.2 billion in its IPO, just barely failing to make it onto the list of the top five IPOs of the year.