Former Zillow Group Inc.(ZG, Financial) CEO Spencer Rascoff discussed with CNBC on Tuesday why the initial public offerings of DoorDash Inc. (DASH, Financial) and Airbnb Inc. (ABNB, Financial) failed.
He explained how the stocks for these companies were completely mispriced. Rascoff said these underpriced IPOs wrong the shareholders and insiders when the companies go public, but they benefit hedge funds and other fund managers.
During the interview, he also noted the IPO market is too hot, which will cause problems going forward for those companies going public. Rascoff also discussed special purpose acquisition companies and how the benefits of them compare to IPOs. While they are a cheaper and faster way for companies to go public, he made it clear there are too many SPACs and predicted many of them will go bust in 2021.
Disclosure: No positions.
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