What makes a successful Unicorn IPO?

Abstract: Amongst the great numbers of companies being listed on the stock exchange, one type of company stands out from the rest. Known as Unicorns, these companies are valued at $1 billion or more before they are even acquired or listed on the stock market. In order to understand why some of these companies perform well on the stock exchange, this thesis attempts to find the driving factors of stock price growth using multiple regression analysis. The results are two different models that can be used by investors considering investing in this type of company. The first model consists of the increase of a company’s total costs, research and development costs, total assets and number of employees. This model is likely to be useful when investing in companies operating in the tech industry as they typically have high research and development costs. The second model consists of a company’s increase in marketing costs, return on invested capital and number of employees. When considering investing in companies that have a large amount of marketing costs, such as companies operating in the retail industry, this model is likely to serve a better purpose. The models are however not accurate enough to solely be relied upon when deciding if and how much to invest but should rather be used as pointers on whether a company will increase in value after the first day of trading.