InnerWorkings (Nasdaq: INWK), a Chicago-based provider of printing solutions to corporations, priced 10.6 million shares at $9 each to raise $95.3 million on Wednesday evening. That was on the high end of its $8- to $9-per- share filing range.
The InnerWorkings deal opened with a bang, considering the current state of the IPO market. The IPO started trading at $10.25 per share and closed its opening day at $10.45, UP 16.1 percent from its initial offering price.
That was the equivalent of a 3-Star SCOOP Rating.
It surprised the experts.
They were looking for a modest opening, a 1-Star Rating. But this is Wall Street, where the only certainty is uncertainty.
Here’s how they misjudged the deal.
On Monday morning, Aug. 14, the IPO market had many negatives, such as:
1.) A losing Nasdaq Composite Index. On Friday, Aug. 11, it had closed at 2,057.71, DOWN 6.69 percent for the year.
2.) A poor performance from this year’s IPO calendar — more losers (63) than winners (39), according to available reports.
3.) And more than half of the summer’s offerings were priced below their original filing ranges -– 18 of 33 deals. This excluded five unit offerings.
It was no wonder the IPO professionals were giving the InnerWorkings deal a 1-Star SCOOP rating. They were looking for the deal to trade from flat to up 49 cents per share above its initial offering price.
On Tuesday evening, when InnerWorkings was priced, the Nasdaq Composite Index closed at 2,115.01. That was UP 57 points from Friday’s close. Then the deal was priced at $9 per share, on the high end of its filing range.
Message in a Bottle
The message was clear.
The underlying stock market was gaining strength. With the InnerWorkings deal priced at that level, that was a signal it would do well in the aftermarket. It did.
But there was more to last week than one IPO.
The bullish IPO story coming from the filing window of the Securities and Exchange Commission continued to build. Another eight companies filed plans to go public. Consider the following:
The Summer of 2006 (as of the close of Aug. 18):
- Companies filing to go public: 91
- Dollar amount: $16.5 billion.
- Nasdaq Composite Index: OFF 0.69 percent from the beginning of the summer.
The Summer of 2005 (as of the close of Aug. 19):
- Companies filing to go public: 78
- Dollar amount: $14.99 billion.
- Nasdaq Composite: UP 3.26 percent from the beginning of the summer.
There’s an old Wall Street expression: “The tape tells the story.” And it’s positive one for IPOs.
Announcement:
IPOScoop.com added a new feature this week for its subscribers. It is: “IPO Pipeline and SCOOP Ratings.”
It is a list of all IPOs in registration (by lead manager), a click through for company profiles and the current SCOOP Rating for each IPO.
As you might know, SCOOP Rating stands for Street Consensus Of Opening Premiums — a general CONSENSUS of how an IPO might trade in the aftermarket.
The SCOOP Ratings are subject to change. Subscribers will be notified by e-mail when this happens.
This gives subscribers a heads-up on the consensus of the opinions of IPO professionals, on how they think each deal will perform well in advance of hitting the calendar.
Another benefit: The “IPO Pipeline and SCOOP Ratings” list is sorted by lead manager. If you have an account with any of them, it might allow you to get an “indication of interest” in early for an IPO you like.