US IPO Weekly Winners & Losers

Until now, most SPAC mergers have gone through. That may be changing.

This week Forbes and SeatGeek became the latest casualties of the SPAC market. Faced with widespread redemptions, both companies called off their plans to list via SPAC merger. A listing is simply not worth it if the result is steep fees, little funding, low liquidity, and reputational harm from poor returns.

With this level of volatility, it's difficult to price an IPO during a 1-week roadshow, but SPACs often set their price 6 months ahead of a deal closing. Just like with IPOs, investors need to see valuations with clear upside or they’ll walk.

This is bad news for the 100+ SPACs with pending merger agreements. And yet hope springs eternal: We counted 19 new SPAC deal announcements in May.

One micro-cap IPO priced this week, a low-float Chinese issuer called Zhong Yang Financial (Nasdaq: TOP) which flew up in early trading. Normally we’d see a wave of IPO launches the week after Memorial Day, but not in this market.

This week we published our recap of the May IPO market. One stark reminder of where we are now compared to this point last year:

The IPO market backpedaled -0.8% this week, slightly better than the S&P 500’s -1.2% return. Chinese issuers led the top IPO performers this week as real estate brokerage KE Holdings gained +24.5%. Buy-now-pay-later firm Affirm lost -17.3% as recession fears weigh on investors’ minds.