
Do profits matter for Tech IPOs? Maybe not - emaercklein
https://craft.co/reports/tech-ipo
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shipinjiuhe
Companies go public to raise capital. But it'd only make sense if they are
generating enough earnings so that investors are not losing their money. For
example, in the case of Snapchat, it'd probably be better off if they raise
another few more rounds of funding from venture capital and figure out a
profitable business model. Otherwise, who wants shares of a company that only
takes but do not give?

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rhyme_combo
From Snapchat's perspective, they should think about where they'll be able to
find the cheapest capital to continue to fund their operations and where
they'll get the highest valuation for a liquidity event. For both of these,
going public seems like a good decision.

For investors, whether public or private, they should be concerned about
companies that seem likely to only take and never give (the hope is that
they'll eventually give). By this stage of funding, companies like Snap,
Facebook, and Uber were getting some money from big institutions who would
also likely be major holders in the IPO, so the gap of who would be potential
investors by raising in public vs. private markets was shrinking.

