Loss-makers riding Wall Street's bull run

It's not been a memorable year for the UK stock market in terms of flotations.
While the Alternative Investment Market has been as perky as ever in terms of activity, there has been less excitement on the main list of the London Stock Exchange, with peer-to-peer lender Funding Circle, investment platform AJ Bell and carmaker Aston Martin Lagonda - which comes to the market on Wednesday - among the few flotations genuinely creating interest.
And, even there, Funding Circle is currently trading at a sharp discount to the price at which its shares debuted.It has been a different story in the booming United States.More than 180 companies have floated during the first nine months of the year, raising more than $50bn, making this the biggest year for Initial Public Offerings (IPOs) since 2014, itself a year in which the figures were distorted by the arrival of Chinese e-commerce giant Alibaba, which raised a record-breaking $25bn.Strip out Alibaba from 2014 and 2018 looks set to be a record.
Loss-makers riding Wall Street's bull run

Spotify is the most high profile company to have floated this year without having made a profit
What is most breathtaking about this year's IPOs in the US is the proportion of companies coming to market that have been loss-making.According to data compiled by Jay Ritter, professor of finance at the University of Florida's Warrington College of Business and one of the world's foremost experts on IPOs, some 83% of companies to have floated in the US this year do not make a profit.His findings, first reported in the Wall Street Journal, cover the period since 1980.Recent examples highlighted by the Journal include SVMK, the owner of online survey provider SurveyMonkey, whose shares jumped by 40% on its stock market debut last week despite it never having made a profit.Tech stocks have been at the forefront of this, including the cloud company Dropbox, whose prospectus even warned that it may never become profitable.Other well-known, but as yet unprofitable, tech companies to have floated this year include DocuSign, the electronic signature technology company, whose shares floated at $29 each in April but which closed on Monday evening at $48.85.Carbon Black, a cyber security firm yet to make a profit, saw its shares float at $19 in May and then rise to $35 before falling back.
Loss-makers riding Wall Street's bull run

Cannabis-related companies have seen a surge of interest
Music streaming service Spotify is probably the most high-profile tech company to have floated this year without ever having made a profit.But this phenomenon of flotations involving non-profitable companies does not only reflect the ongoing popularity of tech stocks.It also reflects surging interest in biotech stocks and also the boom in cannabis-related companies.
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