Two Recent IPOs Show the Boom Continues...READ MORE
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 | | Two Recent IPOs Show the Boom Continues |  | Despite some of the market fears over trade wars, the fact of the matter is, we're in a pretty strong market right now.
We've had a strong market rally off of last year's panicked drop. We're back near all-time highs, even with all the gloom out there. This rally isn't over yet, and one sure sign of it is in the number of privately-held companies going public via an IPO.
The initial public offering boom continues. Both of the major ride-sharing companies have now gone public this year. And other companies have likewise gone from privately-held to publicly-traded.
Are they good investments though? Typically, when doing an IPO, shares should be priced low enough that they'll rally as soon as the public can get in. But shares also need to be priced high enough for early investors like hedge funds and private equity to see a huge gain on their prior investment.
It's a tough dance to do. Ride share companies Lyft (LYFT) and Uber (UBER) both went public this year. Both saw their share price drop below the IPO price.
In Wall Street speak, that makes this IPO a failure. But the early investors got out at a great price.
More importantly, they can now exit their stake in a pair of companies with low operating margins and don't make any money. Uber even created a bit of a stir by disclosing with its IPO paperwork that it may never make any money. This makes the current IPO-heavy market reminiscent of the 1990's tech boom. While there were many great ideas, the profitable ones were few and far between.
Some high-tech products, however, look like they could fare well, even by going public at high valuations. One such name is Beyond Meat (BYND). Shares briefly doubled their IPO price, indicating a successful launch in the eyes of bankers.
Investors may want to shy away from a price pop that quickly, but should still keep an eye on the company. Plant-based meat substitutes have been around for a long time, but the latest generation of these products has finally created a substitute that nearly matches for taste and look that of the genuine article.
While there are a few more IPOs in the pipeline, this kind of surge in companies going public tends to occur late in the market cycle. Investors can be optimistic about some great companies going public that they can finally invest in—but they should look for more reasonable share prices before pulling the trigger.
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