What Went Wrong: Case Studies of Failed IPOs

Introduction: Not all IPOs succeed. This chapter explores the failed IPOs of WeWork, Pets.com, and Snapchat, analyzing what went wrong and the lessons investors can learn.

WeWork

WeWork’s IPO failure was highly publicized:

• What Went Wrong: Analyze the factors that led to WeWork’s failed IPO. Overvaluation, poor governance, and questionable business practices were significant contributors.
• Lessons Learned: Understand the red flags and lessons for future IPO investments. Transparency, sustainable business models, and sound corporate governance are crucial for IPO success.

Pets.com

Pets.com is a classic example of a dot-com bubble failure:

• Analysis of Failure: Learn about the reasons behind Pets.com’s collapse. Overhyped market expectations, excessive spending, and a lack of sustainable revenue contributed to its downfall.
• Market Impact: Discover the broader implications of Pets.com’s failure on the market. The dot-com bubble burst led to increased scrutiny and caution among tech IPO investors.

Snapchat

Snapchat’s IPO had a rocky start:

• Initial Struggles and Recovery: Explore the challenges Snapchat faced post-IPO and its path to recovery. Initial user growth concerns and competition from Facebook were major issues.
• Investor Takeaways: Learn what investors can glean from Snapchat’s IPO experience. Adaptability, innovation, and effective monetization strategies are vital for long-term success.

Conclusion: Studying failed IPOs like WeWork, Pets.com, and Snapchat helps investors recognize warning signs and avoid similar pitfalls. By learning from these failures, you can make more informed investment decisions.