James 1 verses 2 and 6-8 state, “My brethren, count it all joy when you fall into various trials, knowing that the testing of your faith produces patience. But let him ask in faith, with no doubting, for he who doubts is like a wave of the sea driven and tossed by the wind. For let not that man suppose that he will receive anything from the Lord; he is a double-minded man, unstable in all his ways.” There’s a lot to deconstruct in these verses, but there’s a couple major takeaways that are key. First, I for one never like to go through difficulties in life, but unfortunately, the storms or trials of life often are where I end up growing and learning the most. Second, God prefers that I make a definitive choice, rather than attempt to have my cake and eat it too.
Anytime I see an IPO wave on the horizon, I know for certain that I am going to be tested through the entire process of my analysis, and ultimate decision. Testing will come from public and social media pressure regarding opinions and emotionally driven reactions. It will also come from competitive environment assessments, and risk/reward propositions. Regardless, I need to be decisive on my actions in order to be prepared for the wild ride that typically begins on the first public trading day. Like God’s desire for me to faithfully follow Him, I will get eaten alive if I am not prepared to execute a plan.
I am calling the IPOs soon to be going public the Upcoming Winter IPO Wave. This list is growing, and currently includes:
Airbnb, Inc. (ABNB)
DoorDash Inc. (DASH)
Affirm Holdings, Inc. (AFRM)
Wish - ContextLogic, Inc. (WISH)
Roblox Corp. (RBLX)
Ozon Holdings (OZON)
There’s a slew of information that I am digesting to frame my positions and plan prior to these companies trading. This list is a lot more lucrative than the IPOs from the Summer Wave. In fact, upon my initial review, I believe there is a compelling enough case to justify taking a position in all currently on the list, with the only exception being Ozon.
This list is clearly different from the Summer Wave IPOs as some of these Winter Wave IPOs have robust cash flows, while others are seeing significant cash flow inflection points. A key factor to consider is the COVID impacts driving some of this cash flow performance, and how performance may look in a post-COVID world.
Despite the much better combination of robust revenue and cash flow growth, I have only decided at this point that Aribnb, DoorDash and Roblox are likely to have initial positions added on their first trading day.
Affirm’s business model is a little more complicated and while I am keen on adding more Fintech to the portfolio, I am not decided yet as to its inclusion based on its loan and funding model. Wish similarly, is on the radar, but will need to instill confidence that the company can further scale from its current level. Ultimately all of these decisions come down to my financial models and expected first-day trading valuations, versus what happens on the actual trading day.
Since none of these companies are yet a part of the portfolio, I will be engaging in Investment Forum discussions on both Portfolio Moves as trading days approach, and Stock Talk topical investment discussions on all of these names. After the dust settles over a couple months, I will revisit my moves and analysis, similar to the Summer IPO Wave update.