London Daily

Focus on the big picture.
Thursday, Aug 13, 2026

Fund managers waiting out high-profile unicorn IPOs after string of flops

Fund managers waiting out high-profile unicorn IPOs after string of flops

A deep disconnect between private market valuations of companies and the prices their shares fetch on the open market is pushing more mutual fund managers to the sidelines during high profile IPOs, anticipating the newly listed stocks will inevitably fall.

The war over what a company is worth comes as a generation of Silicon Valley darlings exit the insulated world of venture capital, where investors are more focused on a company’s growth and potential, and enter the public markets, where fund managers and analysts put a premium on meeting each quarter’s revenue and profit expectations.

Uber Technologies Inc (UBER.N), for instance, is down about 30% from its May initial public offering price, leaving it with a market cap about $23.1 billion less than its last private market funding round. Peloton Interactive (PTON.O) , meanwhile, is down 22% from its IPO in late September, chopping more than $1 billion off of its market cap.

As a result, fund managers from firms including Osterweis Capital Management, Firsthand Funds and Federated Investors say that they are becoming more cautious about buying companies that have come to market with multi-billion dollar IPOs, so-called unicorns.

“You’re seeing a lot of companies come out with valuations at $8 billion when they really should be $4 billion companies, and the public market is where a lot of the rationality around valuations happens, and it takes the air out of these really well-known unicorns,” said Jim Callinan, portfolio manager of the Osterweis Emerging Opportunities fund.

Callinan is now shifting his strategy to wait until at least after the 180-day lock-up period, following which company insiders are allowed to start selling their shares, before making any positions in a newly public company.

The most attractive price for newly public companies will most likely be at least a year after they go public because large venture capital funds, like Japan’s SoftBank Group Corp’s $100 billion Vision Fund, have distorted private market valuations and let companies focus on building market share rather than outlining a path to profits, he said.

SoftBank was a major investor in WeWork owner The We Company, which pulled its IPO after it failed to get any investor traction at a valuation between $10 billion and $12 billion, a steep drop from the $47 billion valuation it reached in the private market in January.

“You have really big money that’s inflationary, so it’s not until a company has been public for a few quarters that the real valuation can be found,” he said.


IPO SLOWDOWN

Disappointing performances of well-hyped IPOs like SmileDirectClub Inc (SDC.O), which is now down nearly 60% from its initial pricing of $23 in early September, are contributing to a slump in the IPO market overall, said Kathleen Smith, principal at Renaissance Capital, a provider of institutional research and IPO ETFs.

SmileDirect stock continued to tumble despite thumbs up from the banks that led its IPO, with most Wall Street analysts assigning price targets below the IPO price.

The Renaissance IPO ETF (IPO.P), which tracks the performances of newly public companies, is down 12 percentage points over the last 3 months, while the broad S&P 500 index is up nearly 3% over the same time. The ETF fell alnother 1.3% Wednesday.

“Public market investors are boycotting the IPO market because pure and simple they’re not getting the returns they want,” she said. “You’re now getting these very large private companies that had valuations pushed up to ridiculous levels and public investors are pushing back.”

The reticence on the part of public investors to buy into highly valued IPOs will likely start to eat into how private market investors gauge companies, she said. Overall, there were a record 180 private U.S. companies valued at more than $1 billion as of Sept 1, according to PricewaterhouseCoopers.

Private companies have raised approximately $83 billion in venture funding this year, which is on pace to fall below the $117 billion in funding raised last year, according to PricewaterhouseCoopers. Companies going public have raised approximately $41 billion from public market investors this year, according to data from Renaissance Capital.

“Capital gets sloppy when it’s prolific and a lot of bad ideas get funded,” Smith said, noting that the largest discrepancies in valuations have occurred among well known technology companies while less hyped companies like Beyond Meat Inc (BYND.O) have doubled from their IPO price. “WeWork is so obvious that it was a bad idea, but it could end up that Lyft is a bad idea and SmileDirect is a bad idea.”

Kevin Landis, a portfolio manager at Firsthand Funds who invests in both private and public companies, said that the string of disappointing IPOs will likely continue as private market investors focus more on the search for the next big company than its eventual share price performance.

“It’s a great thought exercise to look at a successful private company and ask if it were public how it would trade. A lot of private investors aren’t thinking that way because they’re trying to expand and not thinking about what this would be if it were a stock,” he said. “They want to find that one great idea where they can declare themselves geniuses for finding it so early.”

Newsletter

Related Articles

0:00
0:00
Close
China’s Kimi Launches AI-Focused Credit Card With Agricultural Bank of China and American Express
UK Residents Gather to Watch Rare Partial Solar Eclipse
Reform UK Deputy Leader Richard Tice Faces Criticism Over Legal Threat Against Guardian Journalist
Michael Forsyth Elected Speaker of the House of Lords
Cambridge Researchers Launch £20 Million Human Organoid Drug Testing Programme
Heathrow Loses European Passenger Traffic Lead to Istanbul Airport
Households Near New UK Electricity Pylons to Receive £250 Annual Energy Bill Discount
UK Government Estimates Zero-Hours Contract Ban Could Cost Employers Up to £3 Billion a Year
Robert Jenrick Leaves Conservatives for Reform UK in Major Parliamentary Defection
UK Police Chiefs Urge Government to Block Early Release of Andrew Harper Killers
UK Government Holds Emergency Cobra Meeting as Drought and Heatwave Raise Wildfire Risks
Former Labour Adviser Arrested on Suspicion of Spying for China Held Privileged Access as Top Party Donor
Turkish Parliament Passes Landmark Bill Granting Conditional Amnesty to Disarmed PKK Members
Donald Trump Warns FIFA Against Ousting Gianni Infantino Amid Revolt by Global Football Leaders
Jeff Bezos Joins Investor Group Closing In on $6 Billion Liverpool FC Stake
Police Conduct Cross-Border Raids Against Northern England Drug Network
Nicola Sturgeon Protested at Edinburgh Festival Fringe Event
Major UK Retail Chain Enters Administration With One Hundred Fifty-Four Stores Set to Close
Heathrow Renews Call for Runway Expansion After Losing Europe’s Busiest Airport Ranking
Government Condemns One Million Pound Thames Water Executive Bonus Amid Drought
NHS England Says More Than One Hundred Thousand Hepatitis C Patients Have Been Cured
UK Foreign Secretary Ed Miliband Calls for End to West Bank Settler Violence
UK Prepares for Deepest Partial Solar Eclipse Since Nineteen Ninety-Nine
UK Heatwave Triggers Amber Health Alerts as Economic Losses Reach Four Point Four Billion Pounds
UK Offers Electricity Bill Discounts to Communities Hosting New Power Infrastructure
Bank of England Expected to Hold Interest Rates at Three Point Seven Five Percent
UK Government Moves to Ban Subscription Traps and Misleading Retail Discounts
Andy Burnham Gives Councils New Powers to Block Betting and Vape Shops
UK Councils to Receive Sweeping Planning Powers to Ban New Vape and Betting Shops
Nicola Sturgeon Says She Has No Contact With Estranged Husband After SNP Embezzlement Case
Police Arrest Two Men After Aberdeenshire Defense Technology Office Break-In
Greater Manchester Councils Gain Powers to Restrict New Vape and Betting Shops
Coroner Finds Treasury Workplace Failures Contributed to Personal Assistant’s Suicide
English and Welsh Courts Ban Meta Smart Glasses Over Recording and Privacy Risks
Strait of Hormuz Disruption Could Double UK Inflation and Trigger Recession, Forecasters Warn
UK Expands Global Talent Visa Scheme to Support Research-Intensive Companies
UK Equity Funds Suffer Record One Point Six Billion Pound Outflow Amid Capital Gains Tax Fears
Three-Quarters of England Enters Drought as Fifth Summer Heatwave Raises Economic Risks
UK Hiring Stabilizes for First Time Since 2022 as Employers Adjust to Higher Payroll Costs
UK Chancellor Orders Whitehall Spending Cuts as Public Debt Exceeds Three Trillion Pounds
UK Manufacturing Output Records Fourth Straight Month of Growth
UK Condemns Russian Torture of Ukrainian Prisoners and Recruitment of Foreign Nationals
Long-Lost Royal Navy Warship HMS Tiger Found in English Channel After 118 Years
Northern Ireland Finance Minister Seeks Urgent Treasury Talks Over Regional Budget Pressures
UK Government Targets Subscription Traps and Misleading Discounts in New Consumer Rules
Alleged Cartel Boss Daniel Kinahan Extradited From Dubai to Face Criminal Charges
AI Chatbots Challenge Traditional News Consumption and Raise Job Concerns
Andy Burnham Government Promises Crackdown on Exploitative Business Practices
UK University Funding Model Faces Growing Pressure From Unsustainable Student Debt
Government Urged to Subsidise Energy Bills for Vulnerable UK Households
×