The real return of unicorns: What do we know?

In the world of start-ups, the so-called unicorns have gained special importance and there are many questions about the real attractiveness of these companies when they go public. This research aims to show the effect of an initial public offering of shares (IPO) on the value of unicorn companies. To do so, a four-factor CAPM model was built using data on unicorn and non-unicorn companies to show whether differences exist between both groups. The results indicate that unicorns are punished by the stock market in comparison to non-unicorn companies, which is indicative that private agents may misvalue unicorns and/or unicorns may lose some of their distinctive features once they go public.