A thin sliver of light flashed across last week’s IPO skies, which could signal the return of the new-issues market.
April marked the start of 2015’s IPO second quarter, ushering in a brand-name company (GoDaddy – GDDY) that popped for an opening-day gain of 30.8 percent and another company(Kornit Digital – KRNT)that did better than that – after it was marked down like unwanted merchandise in a department store. Kornit Digital jumped 40 percent on its first day of trading.
But more important, things started to stir at the U.S. Securities and Exchange Commission’s filing window. In case you missed it, nearly a dozen companies filed plans to go public last week. And others started posting their expected IPO pricing terms. This is a stark contrast to the first quarter of 2015. It went into the books as “slow,” according to all reports; more on this later.
Credit And Crafts
TransUnion, the third-largest credit bureau in the United States, was among 11 companies that filed plans to go public last week. The deal has reportedly become an “IPO of interest.” The Chicago-based company, which ranks behind Experian and Equifax, provides credit reports and management services to about 45,000 businesses and 500 million consumers worldwide. TransUnion is looking to raise $100 million. No offering terms were available.
Etsy (ETSY – proposed) set IPO pricing terms last week. It, too, has reportedly become an “IPO of interest.” The Brooklyn-based company operates an e-commerce website for crafters, artists and collectors to sell their handmade creations, vintage goods and crafting supplies. Etsy expects to price 16.7 million shares at $14 to $16 each on Wednesday evening, April 15, to trade on the Nasdaq Global Select Market Thursday morning, April 16.
Looking Back
The media has widely reported that 2015’s first-quarter IPO market was, in a word, “slow.” And it was. Twenty-eight IPOs were priced, excluding the usual suspects, such as American Depositary Shares being offered in the U.S. capital markets representing shares already being traded in foreign securities markets; bank conversions; closed-end funds and unit offerings.
Check this out: The first quarter’s pace in 2015 was slightly below the median of 30.5 IPOs in this period over the last 10 years. What tripped up everybody’s analysis was 2014’s first quarter, which produced 63 IPOs; no mention was made of March 2015’s IPO traffic. That was the fly in the ointment.
March 2015’s calendar produced just six offerings, excluding the usual suspects. In contrast, the week of Jan. 26, 2015, alone turned out 10 IPOs.
Skid Marks
People have been asking for reasons for the “slowdown.”
Look no further than the performance in March of the three major U.S. stock market indexes. They have been much like a car skidding around a muddy road trying to gain traction. The Dow Jones Industrial Average lost 1.97 percent in March, while the S&P 500 slid 1.74 percent and the NASDAQ Composite Index dropped 1.26 percent. Stock markets like this are not a breeding ground for a robust IPO calendar.
But 2015’s second quarter got off to a good start. Two IPOs had noteworthy opening-day pops last week and the pipeline started filling up. To recap: Nearly a dozen companies filed plans to go public, and a couple of deals in the pipeline have already been dubbed “IPOs of interest.”
This week is a return to the doldrums. It has a couple of names that have been hanging around for awhile. The fun starts the following week with Etsy.
Stay tuned.
Disclosure: Neither the author nor anyone else on the IPOScoop.com staff has a position in any stocks mentioned, nor do we trade or invest in IPOs. The author and IPOScoop.com staff do not issue advice, recommendations or opinions.