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In Tencent Music’s IPO, a sign that pricing is coming down to Earth


Given all the volatility, even pricing at the lows and closing in positive territory would have to be considered a successful first day of trading. Still the company has taken a haircut. By pricing at the low end of the range, instead of valuing the company in the $25 billion to $30 billion range as was talked about a few months ago, it came in closer to $21 billion.

Skeptics say that is shot across the bow to all those tech unicorns floating out there waiting to go public in 2019, and that we may see lower valuations than the companies want.

“There’s no doubt we need to have more rational pricing,” Kathleen Smith from Renaissance Capital told The good news, she said, is the deals will likely get done, but the price will depend on market conditions.

The list of unicorns, the name given tech startups with a valuation of $1 billion or more, looking to go public in 2019 is long and getting longer and includes ride sharing apps Uber and Lyft, which have already filed their paperwork. It will also likely include data analytics platform Palantir, photo sharing app Pinterest, workplace messaging app Slack, and trading app Robinhood.

Despite the market turmoil, 2018 has been a good year for IPO deals. So far, 189 IPOs have raised $45 billion, more than 20 percent more than this time last year on both counts, according to Renaissance Capital. The billion-dollar unicorn club featured well-known names like Dropbox, DocuSign and Eventbrite.

What hasn’t worked is after-market pricing. The Renaissance Capital IPO ETF, a basket of the most recent 60 large IPOs, is down 10 percent for the year.

WATCH: Tencent Music Entertainment debuts on NYSE

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