Justworks, a supported project The software startup focused on the HR market for small and medium businesses, announced earlier today that it will delay its initial public offering. In a statement to TechCrunch, Justworks said it had “decided to postpone the IPO due to market conditions at this time.”
Delaying the IPO is just a delay, the public appearance has been postponed. But Justworks’ decision to put its public offering on a temporary hiatus comes in the wake of rapid declines in the value of the latest technology that uses traditional IPOs, SPACs, and direct listings. What’s more, Justworks’ delayed initial public offering follows a sell-off in the value of software and technology stocks in general.
Is there anything bigger than a single company faltering?
reading tea leaves
The Justworks IPO delay is the latest data point in what could be a deteriorating exit market for unicorns. Otherwise we won’t make a fuss.
why? Sometimes when a private company wants to go public, it finds that investors in the public market are not willing to buy its shares at the price they had in mind. By spending more time, the IPO he hopes can rank up his numbers, perhaps answering some of his critics directly with results or business adjustments. Once the company has fine-tuned its performance and image, it can try to float again.
This disconnect between the public and private sectors can arise from a gap between a company’s results, what it believes it is worth, and the overall market view of the company in question. Alternatively, a similar disconnect could arise from public markets simply being on a different page with respect to valuations than private markets. Our reading of Justworks news is that you will likely be dealing with at least the last issue, and possibly the first as well.
The potential for a gap between how private investors evaluate growth-focused technology companies and how the stock market values those companies given the number of rich tech startups that need to find a way out in the next year. In bad news for those companies, a number of factors likely made timing for Justworks’ IPO difficult, suggesting that other unicorns may also struggle to break out in today’s investment climate.