Unicorn exits augur poorly as Justworks delays IPO, citing ‘market conditions’

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Justworks, a venture backed The software startup focused on the human resources market for small and medium-sized businesses announced earlier today that it would delay its IPO. In a statement to Nerdshala, JustWorks said it “decided to delay its IPO due to market conditions at this time.”

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An IPO delay is simply a public start that has been pushed back. But JustWorks’ decision to put its public offering on a temporary hiatus comes on the heels of a sharp drop in value from recent technology debuts employing traditional IPOs, SPACs and direct listings. What’s more, JustWorks’ now-delayed IPO more generally follows a sell-off in the value of software and technology stocks.

Is there anything bigger than a company’s stumbling block?

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JustWorks’ IPO delay is the latest data point to what could be a worsening exit market for Unicorns. Otherwise we wouldn’t have made a fuss.

Why? Sometimes when a private company wants to go public, it finds that the investors in the public market are not willing to buy its shares at the price it had in mind. By taking longer, the IPO is expected to clear its numbers, perhaps answering some of its critics with consequences or business turnaround. Once the company has tuned its performance and image, it may try to float once again.

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This kind of private-public disconnect can arise from a difference between the results of a company, what it thinks they are worth, and the views of the particular firm in the view of the public market. Alternatively, a similar disconnect from the public markets may arise on a separate page regarding valuations compared to the private markets. Our study of JustWorks News is that it is least likely to tackle the latter issue, and probably the former as well.

A gap between how private investors value growth-focused tech companies and how the stock market values ​​those companies is likely because of how richly-valued tech startups need to exit in the coming year. In bad news for those companies, several factors made the timing of JustWorks’ IPO difficult, indicating that other unicorns may also struggle to get out in today’s investment climate.

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