US IPO Weekly Winners & Losers

Here’s something we haven’t seen in a while: Back-to-back down weeks in the IPO market.

The IPO Index tumbled -5.9% this week, compared to the S&P 500’s -0.3% decline. The IPO market’s win streak was interrupted by:

• PPI inflation data running a bit hot.

• Moody’s downgrade of regional banks.

• Deflation concerns in China.

This reinforces our belief that we’ll see a gradual pickup in deal flow in the fall, gaining momentum heading into 2024. Stifel’s Head of US ECM said as much in a CNBC interview.

Despite summer doldrums, the SPAC market is chugging along. Black Spade Acquisition (NYSE: BSAQ) just got the greenlight from shareholders to close its merger with VinFast. The transaction values the Vietnamese EV maker at an astonishing $27 billion, making it one of the largest SPAC mergers ever. VinFast is expected to trade on the Nasdaq under the ticker VFS on Tuesday.

The deal values VinFast well above other large EV makers that have listed via SPAC (LCID, PSNY, FSR), but the valuation has a big asterisk. Because of its >90% redemption rate, the company raised just $14 million from public shareholders, only 0.06% of its total share count. That also explains BSAQ’s price swings, as momentum traders chase low-float issues. Post-merger, SPAC returns have historically been very poor, so VinFast has a lot working against it right out of the gate.

Traditional IPOs are still on their August break, but a few small deals slipped through the window. The lineup included an Australian fitness retailer (FTEL), a liquor marketing firm (LQR), and a nano-cap medical device maker (NRXS).

The week’s IPO Index winner, app monetization company AppLovin jumped +24.0% on better-than-expected earnings, while an earnings miss caused tech consultancy Thoughtworks to plummet -32.2%.