After Mobileye (MBLY), what’s next? So far, only three tiny deals – two IPOs and a NASDAQ uplisting – are on the IPO Calendar this week. With Halloween falling on Monday this year, maybe IPO bankers had the right idea to not schedule any deals for pricing after the close. (Editor’s Note: This column, published on Monday afternoon, was updated after the closing bell.)
U.S. stocks fell on Monday as investors focused on the Fed’s policy comments and its interest-rate decision on Wednesday (Nov. 2, 2022). Wall Street is expecting a 75-basis-point rate hike.
“If they give us 75 and say something that’s dovish, we’ll get a rally, and hopefully, the floodgates will open, and we’ll get a couple of good deals before the end of the year,” a seasoned trader says. He adds that he’s not overly optimistic, though.
But the three major U.S. stock indexes still wrapped up the month of October on Monday (Oct. 31, 2022) with strong gains – on the heels of Friday’s huge rally. The Dow rose 14 percent in October – its best October ever and its biggest monthly gain since January 1976, according to Dow Jones Market Data – while the NASDAQ Composite Index gained 3.9 percent, and the S&P 500 climbed 8 percent.
Morgan Stanley strategist Michael Wilson says he believes that the end of the Federal Reserve’s campaign to raise interest rates is approaching, according to Bloomberg, which quoted Wilson from his note released on Monday.
The inversion of the yield curve – specifically the yield curve between 10-year and three-month Treasuries – “all support a Fed pivot sooner rather than later,” Wilson wrote in his Monday note, according to Bloomberg.
A stronger stock market and a friendlier Fed mean a warmer climate for IPOs.
Mobileye Global, Inc. (MBLY), Intel’s self-driving car unit, got IPO investors’ pulses racing last week with its strong performance. Mobileye’s stock surged nearly 38 percent to close its first day of trading (Wednesday, Oct. 26, 2022) at $28.97 – up $7.97 from its $21 IPO price. Mobileye finished the week at $27.00.
On Monday, Mobileye’s stock closed at $26.38 – up 25.6 percent from its IPO price. Mobileye’s IPO was priced last Tuesday night (Oct. 25, 2022) at $21, which was $1 above the top of its range, on 41.0 million shares. That resulted in a valuation at pricing of about $17 billion – about $2 billion more than what Intel paid for the Israeli company in 2017.
In the countdown to Mobileye’s pricing last week, a veteran IPO trader said: “The valuation looks right. If this deal gets done and it does well, we can hope to see more of this ahead.”
For the month of October, bankers priced seven deals – two IPOs, four SPACs and a tiny public offering in connection with an uplisting – to raise $1,409.0 million – or $1.4 billion.
Both IPOs finished October with gains.
Shares of Prime Medicine, Inc. (PRME), a gene editing company, finished Monday’s session at $18.82 – up $1.90 for a gain of 10.7 percent from its $17 IPO price. The IPO was priced on Oct. 19, 2022, which incidentally was the 35th anniversary of Black Monday.
In its NASDAQ debut on Thursday, Oct. 20, 2022, Prime Medicine’s stock rose 11.6 percent to $18.97 – only to lose steam after about an hour of trading. The stock ended the day down 9.6 percent at $15.37. It took a week to regain its footing. On Thursday, Oct. 27, 2022, Prime Medicine’s stock closed at $17.30, slightly above its IPO price. By the close on Friday, Oct. 28, 2922, Prime Medicine was at $18.65 – up 9.7 percent from its IPO price.
Although the IPO volume in October was light, the performance of those two IPOs and the gains of the overall stock market indicate that things might be improving.
Stay tuned.
(For more information about these companies, please check the IPO Calendar and the individual IPO Profiles found on IPOScoop.com’s website.)
Note: Never trade on proposed symbols. They have been known to change and you might buy something on the OTC Bulletin Board.
To see what time the NASDAQ IPOs are expected to trade, please log in to: NASDAQTrader.com then scroll down to IPO Message.
Disclosure: Nobody on the IPOScoop.com staff has a position in any stocks mentioned above, nor do they trade or invest in IPOs. The IPOScoop.com staff does not issue advice, recommendations or opinions.
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