Surface Oncology (SURF) priced an upsized IPO at the high end of its range. That is normally a strong buy signal, but Surface dropped 11% on its Thursday debut. It is the year's worst first-day drop for a biotech, and the fourth-worst overall. Surface is the only IPO of 2018 to price above the midpoint and break issue.
Between 2013 and 2018, 298 IPOs priced at the high end or above the range, and averaged a 35% pop. Only 6% of IPOs in the group broke issue, including just one IPO last year.
Of the 6% that broke issue, a few managed to rebound, such as 2013 IPO Wix.com (WIX; +322% from IPO) and 2016 IPO Cotiviti (COTV; 83%). However, the majority have continued to slide since their first-day flop, with 9 of 17 dropping more than 10% in the aftermarket.
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| Pricing Up Generally Signals Strong First-Day Returns (US IPOs, 2013-2018) |
|||||
|---|---|---|---|---|---|
| IPOs |
Avg. Premium to Midpoint |
% Negative Debut |
Avg. First Day |
04/18 Return |
|
| Priced at High End | IPO Pro Only | ||||
| Priced Above Range | IPO Pro Only | ||||
| Combined | 298 | 15% | 6% | 35% | 68% |
