Recent IPO frenzy is 'unsustainable' and could end in 'many accidents,' CEO of world's largest asset manager says
- The recent frenzy for IPOs is "unsustainable" and could end in "many accidents," BlackRock's CEO Larry Fink said at a fintech conference, according to Bloomberg.
- The comments from Fink come days after the impressive public trading debuts of DoorDash and Airbnb, which both surged in their first day of trades.
- The Renaissance IPO ETF, which owns a basket of recent US-listed IPOs, is up 111% year-to-date, far outpacing the S&P 500's year-to-date gain of 13%.
- Visit Business Insider's homepage for more stories.
The flurry of high-flying IPOs in 2020 is "unsustainable" and could ultimately end in "many accidents," according to BlackRock CEO Larry Fink.
Fink made the comments at a virtual fintech conference, Bloomberg reported.
He urging caution to investors who may feel gravitated to the excitement of recent IPO launches, saying, "The question is: Is the market pricing in too large of a forward growth rate for these companies?"
Recent IPO's from DoorDash and Airbnb have highlighted the level of investor euphoria given their soaring stock prices in initial trades.
On Wednesday, DoorDash closed 86% above its IPO price of $102, and Airbnb surged as much as 143% in its first day of trades on Thursday. Both companies raised about $3.5 billion in their debut to public markets.
Airbnb's valuation of more than $100 billion on Friday was a strong showing for the home-sharing company, which was valued at just $18 billion during its last private funding round in April amid the COVID-19 pandemic.
Despite the sky-high valuations of Airbnb and DoorDash, both companies are not yet profitable.
The FOMO can be real when high-profile companies go public with strong price reactions from investors. Billionaire investor Chris Sacca recently expressed FOMO due to him passing on an early-stage investment in Airbnb over a decade ago.
Perhaps the best gauge of investor enthusiasm towards IPOs is illustrated by the Renaissance IPO ETF, which owns a basket of recently listed US IPOs.
The ETF has soared 111% year-to-date, far outpacing the S&P 500's year-to-date gain of 13%.