The average tech IPO gained 25% on its first day in 2014. This week's MaxPoint Interactive dropped 15%.
IPO highlights during the week of March 2, 2015:
• 2 IPOs priced in the past week, an adtech and a biotech
• 2015 IPO returns reached their highest levels, averaging +17%
• IPO activity remains slow for a soaring stock market
• Etsy filed: could be largest New York tech IPO in 15 years
1 tech IPO: Has MaxPoint reached its minimum?
Before today, only one $50 million+ tech IPO in the past year fell more than 5% on its first day - Candy Crush maker King Digital (KING). MaxPoint Interactive's (MXPT) 15% first-day fall is especially unusual given the track record of lead underwriter Goldman Sachs. Since 2009, Goldman has been the lead left on 117 IPOs, and only one (RKUS) had a worse first day, making MaxPoint a poor follow-up to its last tech deal, Inovalon (INOV), which debuted with a 0% return. As mentioned in the Week Ahead, several adtech IPOs in the past two years (TRMR, FUEL, MRIN, YUME) have blown up - an unwelcome red flag ahead of MaxPoint. The company may have been wise to follow top-performing peer TubeMogul (TUBE; +82%), which slashed its offer price by 42% last year to get done.
1 biotech IPO: Going public in the US must be infectious
If US investors have gone gaga for biotechs, UK-based Summit Therapeutics (SMMT) joined the NASDAQ at the right time. The company, which was already listed in London, is developing therapies for the rare disease Duchenne Muscular Dystrophy as well as an infection associated with antibiotics. Summit traded at $11.50 last week but its stock price had fallen to $9.90 by Wednesday; the biotech raised $34 million and traded up slightly. It had the good fortune of seeing close peer Prosensa (RNA) acquired for $860 million last November and PTC Therapeutics (PTCT) spike 35% in February amid rumors of an acquisition.
Second Summit: One IPO on next week's IPO calendar
Just one IPO is scheduled for next week. Formed by Blackstone (BX) in 2009, Summit Materials (SUM) is looking to raise $400 million. Summit, which had $1.2 billion in sales during 2014, provides concrete and aggregates for construction.
As we'll discuss in an upcoming blog, hipster online marketplace Etsy (ETSY) filed for an IPO rumored to raise $300 million or more. That could buy a lot of skinny jeans and v-necks.
| IPO pricings (week of March 2, 2015) | |||||
| Company (Ticker) | Business | Deal Size ($mm) | IPO Price vs. Midpoint | First-Day Pop | Return as of 3/6 |
| Summit Therapeutics (SMMT) | Biotech: DMD and CDI | $34 | 0% | 3% | 4% |
| MaxPoint Interactive (MXPT) | Local adtech platform | $75 | 0% | -15% | -15% |
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IPO market snapshot
The Renaissance IPO Index, a market cap weighted basket of newly public companies that is designed to represent the US IPO market, has traded up nearly 6% year-to-date, close to its all-time high. The IPO market remains open to new issuance, if deals are priced right. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Twitter (TWTR), Zoetis (ZTS), Alibaba (BABA), Hilton (HLT) and Ally Financial (ALLY). To find more about purchasing shares of the ETF from your broker, visit our new IPO investing page.
