DoorDash Extends IPO Craze, Banishing Angst From Big Tech Slide

Some day, investors will be overwhelmed by all the fresh stock coursing into the U.S. equity market, and maybe even regret bidding up buzzy businesses that haven’t earned any money. But that day has not yet come.

Even in an uncharacteristically painful session for tech bulls, with the Nasdaq 100 suffering its worst drop in a month, appetite for new issues remained voracious Wednesday. Two initial public offerings -- DoorDash Inc. and Inc. -- scored huge gains on their debut, each rising at least 85%. Another IPO, from Airbnb Inc., is expected to price above its targeted range after the close.

While the robust reactions underscore a healthy market, they are grist for market veterans who lived through the dot-com bust, who can’t help but warn that a bubble is building again. The rush to chase gains in unprofitable companies is of particular concern. Among some 200 firms that went public this year, 80% have yet to earn money. Their stocks surged an average 27% on the first trading day, data compiled by Bloomberg show.

“It feels like the markets are partying like 1999 all over again,” said Gene Goldman, chief investment officer at Cetera Financial Group. “Companies are using this opportunity because the market is so thirsty.”

With the Federal Reserve and retail investors providing support, stocks have staged an epic rally from their bear-market low in March, adding $18 trillion in value. Positive vaccine news and government stimulus ignited animal spirits. Besides newly public shares, small caps and companies with shaky finances have been the beneficiaries.