A recent IPO frenzy is ‘unsustainable’ and could end in ‘many accidents,’ says the CEO of the world’s largest asset manager

FILE PICTURE: Larry Fink, CEO of BlackRock, stands at Bloomberg Global Business forum in New York, US, September 26, 2018. REUTERS / Shannon Stapleton
PICTURE OF THE FILE: Larry Fink, CEO of BlackRock, stands at Bloomberg’s Global Business forum in New York

  • The recent frenzy for IPOs is “unsustainable” and could end in “many crashes,” BlackRock CEO Larry Fink said at a fintech conference, according to Bloomberg.
  • The comments from Fink come days after the DoorDash and Airbnb public trades, which surged in their first day of trades.
  • Renaissance IPF IPO, which owns a basket of recent US-listed IPOs, is up 111% to date, far exceeding the S&P 500 year-to-date earnings of 13% to date.
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A host of high-flying IPOs in 2020 are “unsustainable” and could eventually end in “many accidents,” according to BlackRock CEO Larry Fink.

Fink made the comments at a virtual fintech conference, Bloomberg reported.

He urges caution for investors who may feel excited about recent IPO launches, saying, “The question is: Are market prices too big a growth rate for these companies?”

Recent IPOs from DoorDash and Airbnb have highlighted the level of investor euphoria given their high stock prices in initial trades.

On Wednesday, DoorDash closed 86% above its $ 102 IPO price, and Airbnb rose as much as 143% in its first day of trades on Thursday. Both companies raised about $ 3.5 billion in their first public markets appearance.

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Airbnb’s valuation of more than $ 100 billion on Friday was a strong showing for the home-sharing company, which was priced at just $ 18 billion during its last private financing round in April amid the COVID-19 pandemic.

Despite Airbnb and DoorDash sky-high valuations, both companies are not yet profitable.

The FOMO can be real when high profile companies go public with strong investor price responses. Billionaire investor Chris Sacca recently expressed FOMO because he transferred an early-stage investment in Airbnb over a decade ago.

Perhaps the best measure of investor enthusiasm for IPOs is the Renaissance IPO IPO, which owns a basket of recently listed US IPOs.

The ETF has soared by 111% so far, far exceeding the S&P 500 year-to-date earnings of 13% to date.

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