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7 Worst IPOs in History

UTC by Tolu Ajiboye · 4 min read
7 Worst IPOs in History
Photo: Unsplash

These are seven of the worst IPOs of all time and feature a vast range of companies, from an online toy store to a biotech firm.

An initial public offering (IPO) is usually a pivotal moment for most companies. It is the litmus test of a company’s identity prowess and a strong indicator of how much faith – or lack thereof, that people have in it. IPOs can be a scintillating experience for both the company and its investors because they essentially separate the professionals from the amateurs. At the same time, IPOs can be a living nightmare for other companies who overestimate a few or several things about themselves before going public. In no particular order, below are 7 of the worst IPOs of all time.

eToys

The company was one of the first large internet retailers to go public. It had the sole aim of becoming a one-stop internet shop for children’s toys and games. In fact, eToys considered competitors like Toys ‘R Us to be behind times because the latter was domiciled in traditional physical buildings. eToys went public on May 20th, 1999, at a share price of $20, and saw price surge to approximately $76 on the first day of trading.

However, despite this impressive feat, the company never gained its footing in profits and cash flow. According to regulatory filings, eToys was spending almost all of its sales revenue on marketing. In addition, the company built a colossal and hugely expensive facility from scratch to stock its inventory. As a result of this and so many other cash-bleeding occurrences, eToys filed for bankruptcy in 2001.

Pets.com

One of four online pet stores that came to being during the internet boom of the late ‘90s, Pets.com even fared worse than eToys. The company splurged millions on ostentatious advertising displays in a bid to grow quickly regardless of costs incurred. Pets.com most notably bought a Super Bowl ad for $1.2 million and launched a balloon of its mascot at a Macy’s Thanksgiving celebration.

Pets.com’s IPO took place in 2000, where the company raised $82 million, which did not insulate the company against failure, with shares plummeting from $14 to 22 cents. Nine months later, Pets.com crashed.

Groupon

Even though Groupon is still around today, the online discounter’s rapid slump is well documented. Groupon launched back in 2008, some months before the global meltdown, to great reception. As a result, the firm hit the $1 billion mark in sales faster than any other company in history.

Groupon fared well for about two years, even famously rejecting a takeover bid by Google (now Alphabet) that valued it at $6 billion. Groupon’s IPO was $20, later opening to public trading at $28. However, less than 13 months later, shares slumped to $5. Sales growth has slowed since then, and profits are very few and far between.

Deliveroo

The British online food delivery company was supposed to be a winner, considering the fact that it experienced surging demand during Covid. In fact, tech giant Amazon even bought 16% of Deliveroo – supposedly further proof of the latter’s star power. However, the company’s IPO proved to be a fiasco. Stocks slumped, eventually closing at 26% below listing price, shaving off $2 billion from Deliveroo’s market capitalization. This represented the worst-performing London debut for a major IPO in over twenty years.

Casper Sleep

It was all bad news from the get-go with e-commerce sleep products company Casper Sleep. Its IPO started at $17 before sliding down to $13. Since mid-April, the share price has been stuck, and it still trades 40% below its lowered IPO price.

Omeros

The worst IPO flop of 2009, Omeros went public in October of that year, raising $62 million on a share price of $10. However, the biotech firm saw its shares plunge furthest the fastest, out of 42 companies that went public, some weeks later.

Shanda Games

The Chinese company, prominent in the online gaming market, launched a US IPO in September 2009. Shares went up from 63 million to 83.5 million, at an opening share price of $12.50. Shanda Games raised a total of $1.04 billion, the largest American IPO of 2009 to date. However, due to greed from the company’s underwriters, investor numbers quickly dwindled out, and share price immediately slumped 14 percent.

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Tolu Ajiboye
Author Tolu Ajiboye

Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.

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