US IPO Weekly Winners & Losers

IPOs showed some green for St. Patrick’s Day after all.

In a week that felt like a month, the IPO market jumped +4.5%, beating the S&P 500’s +1.4%. The Fed is unlikely to put in a steep rate hike next week, which drove gains in the tech sector, though crypto exchange Coinbase took the top spot, up +40.3%. Energy prices dipped, which caused fracking play ProFrac to land at the bottom, off -19.6%.

It was the sixth straight week that IPO returns have flip-flopped between positive and negative. It’s no surprise that IPO filers are sitting out the current volatility.

Many investors are waiting for the other shoe to drop, and it will take some time and stability to shake that feeling. Confidence is the invisible glue that holds together banking and finance, industries which touch every other part of the economy. If confidence goes, it won’t matter that this was sparked by an asset-liabilities mismatch that panicked depositors, rather than, say, trillions in highly levered crap.

Experienced investors are balancing two ideas.

1) A little paranoia can be a good thing. It helps you spot necessary course corrections in advance, and prevents panic later on. Though testing your convictions doesn’t always change your strategy. I’m reminded of the book Only the Paranoid Survive by former Intel CEO Andy Grove. In the startup space, many unicorns fear a down-round, but they should be more paranoid about private funding drying up entirely.

2) The market will turn around. We don’t like to make predictions, but that’s an easy one. Several times we’ve called this a 'once-in-a-decade bear market,' and most Americans will witness about 7 or 8 of them in a lifetime. A new bull market will begin again.

For most investors, we believe the solution is a balanced (and re-balanced) portfolio that includes some exposure to New Stocks.

Two very small Chinese IPOs listed on the Nasdaq this week, a crypto mining supplier (ICG) and a B2B e-commerce play (IZM). A small SPAC (FORLU) raised $52 million. A Nebraska mining company (NB) and a Chinese biotech (YS) both completed SPAC mergers.

The IPO calendar is currently filled with micro-caps. The pipeline showed some movement, with news or updated filings from larger deals such as piano maker Steinway, J&J spin-off Kenvue, Vietnamese EV brand VinFast, Chinese procurement platform ZKH Group, and Chinese vet chain New Ruipeng Pet.