US IPO Weekly Winners & Losers

I don’t call market bottoms. And I won’t ever tell you IPOs are in deep value territory.

But I can say this:

  • IPOs typically lead on the way down, and the way back up.

  • A handful of the market’s strongest days account for most of its performance.

On Wednesday, our IPO Index finished the worst 5-day stretch in its 13-year history. It then had its best 2-day stretch. After a tumultuous week, the IPO market was down -3.2%, versus the S&P 500’s -2.4%. Weeks like this aren’t uncommon in a bear market.

Three IPOs priced this week, led by oil & gas fracker ProFrac Holding (Nasdaq: PFHC), which finished pennies above issue after slashing its price. Regional NY bank Hanover Bancorp (Nasdaq: HNVR) also priced down and had a single-digit gain.

Four SPACs went public, the most in 10 weeks. You may wonder who’s buying SPACs right now, but a guaranteed return of up to 3% at redemption looks pretty good in this market. In reality, forming a SPAC, underwriting a SPAC, or holding shares into a de-SPAC are the riskier plays.

Normally a wave of filings would have teed up this week for post-Memorial Day launches, but IPOs are waiting out the volatility. However, news broke that grocery delivery platform Instacart filed confidentially.

After periods of indiscriminate selling, stock pickers look for “fallen angels” since a good quarter can lead to a strong pop. This week’s IPO winner Squarespace gained +21.5% for the week. On the flip side, higher rates and slower economic growth are causing companies to lower their 2022 forecasts, which caused lending platform Upstart to crash -54.5%.