Wall Street loves a Cinderella story. Rent the Runway (RENT) increased its IPO’s size and priced the deal at $21 – the top of its $18-to-$21 range – to raise $357 million on Tuesday night. Bankers priced 17 million shares – up from 15 million in the prospectus. RENT started trading on Wednesday (Oct. 27, 2021) at $23 – up 9.5 percent from its IPO price. The thrill was gone, though, by the closing bell. RENT closed its first day of trading at $19.29, technically a broken deal with a drop of 8.14 percent from its IPO price. (This column was updated Thursday afternoon with details on GlobalFoundries’ IPO pricing and its NASDAQ debut. The column was updated twice on Wednesday – after Rent the Runway’s stock began trading on NASDAQ – and after the market’s close.)
Word went out on Tuesday afternoon that a big buyer was stepping in to sweep up a lot of stock.
Goldman Sachs, Morgan Stanley, Barclays, Credit Suisse, Piper Sandler, Wells Fargo Securities, JMP Securities and KeyBanc Capital Markets were the joint book-runners on Rent the Runway’s IPO.
Rent the Runway invented the designer rental closet in the cloud in 2009. Suddenly women could wear a designer gown or cocktail dress – a Badgley Mischka column of gold sequins or a Monique Lhuillier sliver of cobalt blue, for example – on their big night out without going into debt. Evening wear and accessories could be rented for a few nights for just a fraction of their retail cost – typically a few hundred dollars to rent instead of $1,000 or more to buy. The selection, the sizes and the service made Rent the Runway the go-to choice for women with black-tie events and formal weddings on their social calendars. The business evolved to include a subscription service for clothing rental and a full wardrobe of options – career clothes, casual clothes, workout wear and coats. A resale feature, offering gently used designer clothes for sale, is a recent addition to Rent the Runway’s closet.
When the pandemic hit, Rent the Runway was left out in the cold. Women in lockdown didn’t need designer clothes. A drop in rentals and subscriptions, layoffs and store closings spilled red ink all over Rent the Runway’s balance sheet.
Rent the Runway’s upsized IPO comes on the heels of the U.S. reopening from the pandemic. Broadway’s back. Weddings are in full swing again. More people are going back to the office.
Wall Street’s bulls and fashionistas are on the same page with Rent the Runway. They’re hoping for a comeback story.
Cashing in the Chips
GlobalFoundries (GFS proposed) was highly anticipated as “the deal of the week.” The company, based in Malta, New York, says it is the only scaled pure-play semiconductor foundry with a global footprint that is not headquartered in China or Taiwan.
This IPO was the headliner on an IPO Calendar of 15 deals this week, when bankers expect to raise more than $7 billion.
GlobalFoundries priced its IPO on Wednesday night (Oct. 27, 2021) at $47 – the top of its $42-to-$47 range – on 55 million shares to raise $2.585 billion. When GlobalFoundries started trading on the NASDAQ on Thursday, the IPO opened flat – at $47 – and then fell during the day to as low as $44.48. The stock closed its first day of trading at $46.40, down 1.28 percent from its IPO price, and technically a broken deal.
The disappointing debut of GlobalFoundries caused heartburn up and down Wall Street on Thursday.
Morgan Stanley, BofA Securities, J.P. Morgan, Citi, Credit Suisse, Deutsche Bank Securities, HSBC and Jefferies were the joint book-runners.
The global chip shortage drove the interest in this IPO.
Of the 55 million shares in the IPO, the company offered 33 million and the selling stockholder – Mubadala – offered 22 million shares. GlobalFoundries will not receive any proceeds from the sale of Mubadala’s 22 million shares.
Mubadala, the Abu Dhabi government’s investment arm, owns GlobalFoundries. After the IPO and a concurrent private placement, Mubadala will own 89.4 percent of the voting power of GlobalFoundries’ outstanding stock.
GlobalFoundries was founded in 2009 when a Mubadala subsidiary bought AMD’s manufacturing operations in Dresden, Germany, and a fab project site in Malta, New York. In 2010, the company combined with Chartered Semiconductor Manufacturing, which formed the basis for its Singapore hub. In 2015, GlobalFoundries acquired IBM’s Microelectronics division with chip plants in New York and Vermont.
GlobalFoundries counts some of the world’s biggest chip makers as customers, including Qualcomm, Advanced Micro Devices (AMD), Samsung Electronics Co. Ltd. and Broadcom.
Flight Pattern
AllBirds, Inc. (BIRD), the unicorn whose “Wool Runner” casual shoes have a cult following, is on next week’s IPO Calendar. The IPO line-up is building slowly for the first week of November.
Stay tuned.
For more information, please check the IPO Calendar and click on a company’s name, which will take you to the IPO Profile and a link to the prospectus.)
(Never trade on proposed symbols. You might wind up owning something on the OTC Bulletin Board.)
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