None of this year's newly tradable biotech companies are expected to turn a profit for the next three years, Goldman found.
Two crossed lines that form an 'X'. It indicates a way to close an interaction, or dismiss a notification.This year's class of IPOs is expected to be the least profitable of any year since the height of the tech bubble in 1999, according toOnly 24% of 2019's newly tradable companies are expected to report positive net income in their first year on the market, compared to 28% in 1999, the peak of the tech boom.
Though investors prefer positive income sooner than later, first-year profitability had"no discernible impact" of IPO outperformance for a company's first three years on the market, the analysts found.More than 75 initial public offerings have taken place in 2019 so far, but the newly tradable companies are set to be the least profitable class in more than two decades.
Still, this year's IPO proceeds are projected to surpass those of every year since at least 1995, according to the analysts. More than $31 billion has raised in public offerings year-to-date, second only to 1999, when the tech boom helped bring in $58 billion. Though some of the buzziest IPOs of 2019 have come from the tech sector, biotech companies are also to blame for the below-average level of profitable firms. Drug-development firms account for more than a quarter of the year's IPOs, Goldman Sachs chief US equity strategist David Kostin wrote. He also noted that none of them are expected to reach profitability over the next three years.
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