Following the 9/11 terror attack, transportation security at our airports underwent a dramatic paradigm shift. No longer was public trust a given. Instead, the federal government implemented multiple protective measures to shore up prior vulnerabilities and to prevent another catastrophic assault. From this dire circumstance, CLEAR Secure, Inc. made its debut to deliver both safety and convenience to the security infrastructure.
However, only an extremely small minority of people have ill intent. To help move the line along, CLEAR uses a proprietary frictionless system for trusted travelers, drawing much intrigue for the company’s initial public offering (IPO).
When is the CLEAR Secure IPO Date?
Peruse the IPO calendar and you’ll see how analysts believe a range of companies will perform.
Under the terms of the IPO, CLEAR Secure will offer 13.2 million shares of its Class A common stock. Experts observing the proceedings expect YOU stock to price between $27 and $30 per share. At the high end of the pricing spectrum, the market debut will raise $396 million. At that level, the valuation will reach approximately $4.34 billion.
One notable factor that makes the YOU stock debut distinct from other IPOs is that select Robinhood users were allowed to buy shares of CLEAR Secure at the initial offering price, just before trading began on the secondary market (in this case, the NYSE).
In a program called IPO Access, Robinhood partners with investment banks, acting as an institutional client on behalf of regular retail investors. Upon acquiring pre-IPO shares, Robinhood later distributes these equity units to its own customers.
CLEAR Secure Financial History
Though the end purpose is critical to transportation security, very few people, if any, enjoy the hassle of going through airport security procedures. Even in locations that feature quick wait times — such as Salt Lake City International Airport with an average wait time of just over 9 minutes — the inconvenience of removing (and then quickly wearing) articles of clothing can be stressful, to say the least.
But at airports where the wait times are longer — for instance, Newark Liberty International and its 23.1-minute average wait — the annoyance can compound quickly, resulting in diminished traveling experiences for consumers. Unsurprisingly, then, CLEAR Secure garnered much support from frequent flyers over the years, commanding 5.6 million members and over 100 unique locations and partners across the North American market.
In 2020, CLEAR generated revenue of $230.8 million, which is up 20% from 2019’s result of $192.3 million. Just as notable, the company’s pro forma net loss last year was $10.8 million, representing a substantial improvement over the loss of $54.2 million in 2019. Most impressively, the security management solutions provider delivered top-to-bottom progress in 2020 despite the initially catastrophic impact of the novel coronavirus pandemic.
At the worst of the crisis, air travel volume fell to single-digit percentages of pre-pandemic norms. According to International Civil Aviation Organization estimates, the airline industry lost more than $370 billion in 2020, a truly staggering amount of red ink. Therefore, the expectation was for travel-related industries to crumble in 2020, not move in a positive trajectory. Yet CLEAR’s subscription-based service continued to bring in the numbers, boding well for its IPO.
CLEAR Secure Potential
Multiple factors point to the upside potential of CLEAR Secure, beginning with its favorable positioning relative to the competition. As mentioned above, CLEAR Secure operates as a subscription-based service, charging $179 annually. In return, subscribers don’t have to deal with the dignity of temporarily going shoeless. Yet the Transportation Security Administration’s PreCheck service only costs $85. You’d think that consumers would opt for the cheaper option, but millions prefer CLEAR Secure.
And this preference segues into the second bullish argument supporting YOU stock. For starters, CLEAR’s system incorporates a touchless biometric scan, which is a massive advantage in the age of COVID-19. Also, the company isn’t just an airport security platform. Rather, its clients’ identification is tied to a security network that is connected with multiple partners. Therefore, CLEAR subscribers can enjoy hassle-free admission to sports and entertainment facilities — again, a huge benefit in the new normal.
Third, YOU stock could rise in value in the secondary market due to the retail revenge phenomenon. For a one-year period or longer, the pandemic denied consumers the ability to travel wherever they wanted and advantage the products and services they typically enjoy. With funds saved up, along with receiving federal stimulus checks, consumers have more money than ever -- and they want to spend it.
Finally, the dramatic rise of consumer sentiment may clog up transportation security infrastructures as they ramp up to meet demand. Even before the pandemic, security wait times cost the U.S. economy over $4 billion. As society normalizes, many frequent flyers will be unwilling to individually contribute to this cost, which will indirectly support the narrative for YOU stock.
How to Buy CLEAR Secure IPO (YOU) Stock
Though the CLEAR Secure debut is distinct in that it allows retail investors to participate in the public offering via Robinhood, there’s a lesson here that everyone should learn regarding traditional IPOs: Underwriters only have a limited number of shares to sell and therefore are incentivized to sell them to their choicest clients. Therefore, this economic rationalism prevents retail investors from participating in IPOs.
However, Robinhood also had a limited pre-IPO share count offering. Chances are, if you wanted to acquire YOU stock, you would have needed to do so at the open. While you likely won’t receive the best price with this method, it’s the easiest approach. If you know how to buy stocks, you can jump right in. If not, follow the simple steps below.
Step 1: Pick a brokerage.
Prior to the advent of connectivity technologies, investors had to spend significant time deciphering which brokerage to use. In the “analog” days, certain platforms would vary widely in price. But with the mass proliferation of mobile investing apps, most of the key financial incentives to join, such as commission-free trading, are now standard.
This dynamic allows you to pick a platform that best suits your needs and preferences. Below is a list of best brokers to help guide your research.
Step 2: Decide how many shares you want.
Why state the obvious? Your share count is actually critical because it determines your risk-reward profile. The more shares you own, the more profits you accrue should the underlying stock rise in value. Conversely, the opposite is true. Therefore, only ramp up your share count for stocks you truly believe in.
Step 3: Choose your order type.
Familiarize yourself with the following concepts before placing your first trade:
- Bid: The bid is the maximum price a buyer will offer. It is always lower than the ask.
- Ask: The ask is the minimum price that a seller will accept. It is always higher than the bid.
- Spread: Primarily the difference between the bid and ask, the spread also reveals information about market liquidity and risk. Tighter spreads imply higher liquidity and lower risk due to ample buyer availability. In contrast, wider spreads indicate lower liquidity and higher risk.
- Limit order: Use limit orders to trade stocks at a specific price. Be aware that there’s no guarantee that the market will fulfill your limit order.
- Market order: Use market orders to buy shares at the prevailing rate. Note that buy orders execute on the ask and sells on the bid, which are unfavorable terms.
- Stop-loss order: Stop-loss orders exit you out of your position at a predetermined price or the next available price, whichever circumstance comes first. Beware of gap-down sessions, which may cause your stop-loss order to fill well below your predetermined price.
- Stop-limit order: For total transparency, use a stop-limit order to only allow automated exits to execute at a specific price. Again, the market might not fulfill your stop-limit order, depending on the circumstances.
Step 4: Execute your trade.
To execute a market order, follow these steps:
- Select action type (buy or sell).
- Enter the shares you want to acquire (or sell).
- Hit the Buy (or Sell) button.
Follow the same steps for market orders, except that you must also enter your desired execution price.
YOU Restrictions for Retail Investors
Before jumping on an IPO opportunity, you should review the Financial Industry Regulatory Authority’s guidance on restricted persons, which prevents people with access to insider information from unfairly profiting from the market debut.
While the Robinhood access to pre-IPO shares is distinct for YOU stock, other companies such as ClickIPO offer similar services. In this case, ClickIPO buys blocks of select pre-IPO stocks and offers them to interested retail investors.
An Offering Cleared for Takeoff
Post 9/11, the security paradigm for the U.S. transportation network changed dramatically to address asymmetric threats. While everybody travelers appreciate the underlying purpose of screening protocols, they are both cumbersome and economically draining.
Fortunately, CLEAR Secure provides an innovative solution, offering accurate and touchless biometric scans to its subscribers for easy access across multiple airports and entertainment facilities. Better yet, as the COVID-19 crisis fades, travel volume will return in earnest, boosting demand for YOU stock.
Related content: IPO Calendar
About Joshua Enomoto
His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.