In the most successful billion-dollar IPO since Corvis’ 135% first-day pop in July 2000, Twitter jumped 73% on Thursday after raising $1.8 billion at $26 per share, far above its initial $17 to $20 range. Twitter’s (NYSE:TWTR) 60% gain through Friday gave it a lonely perch in a week with 12 other, mostly poorly received US IPOs. No other deal ended the week up more than 20%, and nine at least temporarily broke below their offer prices. The week also saw the first postponement since August, and one other deal was pushed back to this week. The Renaissance IPO ETF (NYSEARCA:IPO), a measure of post-IPO returns, was flat for the week. Still, the 13 pricings were the most in a week since November 2007. The year is now second since 2000 for proceeds raised ($46.9 billion vs. 2007’s $48.7 billion) and fourth for IPOs completed (195 vs. 2004’s record 217). The IPO calendar has stayed packed too, with 12 deals setting terms last week and at least 20 more IPOs expected before Thanksgiving.
Six IPOs end the week with negative returns
Although Twitter’s IPO performance was impressive, large first-day returns have become increasingly common this year. The 73% first-day gain, which would have placed near the top in any of the previous five years, was only the tenth best since September. That said, the return was unusual for a deal of Twitter’s size: Of the 20 IPOs this year that raised more than $500 million, only Twitter gained more than 25% on its first day, and the average first-day return for the rest was only 7%. Twitter's performance was largely a reflection of its long-term growth profile, which far exceeded that of all other large IPOs year-to-date. Twitter will qualify for entry into the Renaissance IPO ETF at the market’s close on November 13.
The week’s remaining deals mostly struggled. Two companies, JGWPT Holdings (JGW) and Mavenir Systems (NYSE:MVNR), priced five dollars below the range and still fell 8%. The best performance after Twitter’s came from LGI Homes (NASDAQ:LGIH), which priced two dollars below the range and gained 19%. The only other company to gain more than 10% was Barracuda Networks (NYSE:CUDA), which sells security and storage software to small businesses. Barracuda's IPO float was unusually low at 4.1 million shares (8% of all shares outstanding), and insiders bought up to 20% of the deal.
|IPO pricings (week of November 4, 2013)|
|Company (Ticker)||Business||Deal Size ($mm)||IPO Price vs. Midpoint||Return as of 11/8|
|Twitter (TWTR)||Microblogging service||$1,820||41%||60%|
|LGI Homes (LGIH)||Entry-level homebuilder||$99||-21%||19%|
|Barracuda Networks (CUDA)||SMB security software||$75||-8%||18%|
|NMI Holdings (NASDAQ:NMIH)||Mortgage insurance||$27||8%||8%|
|Wix.com (NASDAQ:WIX)||SMB web presence||$127||6%||5%|
|Karyopharm (NASDAQ:KPTI)||Cancer treatments||$109||7%||2%|
|Arc Logistics (NYSE:ARCX)||Oil product terminals||$114||-5%||0%|
|Midcoast Energy (NYSE:MEP)||Midstream energy assets||$333||-10%||-1%|
|Norcraft Companies (NYSE:NCFT)||Cabinetry manufacturing||$102||-6%||-3%|
|Avianca Holdings (NYSE:AVH)||Latin American airline||$409||-19%||-3%|
|Blue Capital Re (NYSE:BCRH)||Property reinsurer||$125||0%||-4%|
|Mavenir Systems (MVNR)||Telecom software||$48||-38%||-8%|
|JGWPT Holdings (JGW)||Payment stream purchases||$137||-32%||-8%|
Twelve small deals added to the calendar
For the second straight week, more than ten companies set terms, but most of the new deals were small, with ten seeking to raise $100 million or less. Seven of the new deals were from health care companies with under $50 million in annual revenue. Dynagas LNG Partners (NYSE:DLNG) and Navigator Holdings (NYSE:NVGS) launched the largest deals, for $250 million and $203 million, respectively; both operate liquefied gas carriers.
|IPOs setting terms (week of November 4, 2013)|
|Company (Ticker)||Business||Deal Size ($mm)||LTM Sales ($mm)|
|Dynagas LNG Partners (DLNG)||LNG carriers||$250||$83|
|Navigator Holdings (NVGS)||Liquefied gas carriers||$203||$207|
|Tandem Diabetes Care (NASDAQ:TNDM)||Insulin pumps||$100||$21|
|TetraLogic (NASDAQ:TLOG)||Cancer treatments||$90||$0|
|Evogene (NYSE:EVGN)||Genetically enhanced seeds||$86||$18|
|GFI Software (Pending:GFIS)||SMB IT software||$79||$139|
|Oxford Immunotec Global (NASDAQ:OXFD)||Tuberculosis diagnostics||$75||$34|
|Trevena (NASDAQ:TRVN)||Heart failure treatments||$75||$0|
|Xencor (NASDAQ:XNCR)||Autoimmune disease treatments||$75||$11|
|CardioDx (CDX)||Heart disease diagnositcs||$75||$7|
|Vital Therapies (NASDAQ:VTL)||Liver failure treatments||$75||$0|
|500.com (NYSE:WBAI)||Chinese lottery service||$58||$33|
Social recognition company and Chinese auto website among new IPO filers
Seven companies made initial IPO filings last week. A majority were health care companies, including Kindred Biosciences (NASDAQ:KIN), a developer of pet therapeutics. The last pet therapeutics company to go public, Aratana Therapeutics (NASDAQ:PETX), is up 252% since its IPO in June. Globoforce (Pending:THNX) filed for a $75 million IPO. It provides social recognition software that allows employees to recognize each other for positive actions and behaviors. Regonized employees accrue points that they can use for a variety of awards, including online shopping and travel. Autohome, a site for car listings and reviews in China (similar to Kelley Blue Book), filed for a $120 million IPO. The filing follows the recent IPOs of Chinese websitse Qunar.com (NASDAQ:QUNR) and 58.com (NYSE:WUBA), which have gained 71% and 68%, respectively.
|New IPO filers (week of November 4, 2013)|
|Company (Ticker)||Business||Deal Size ($mm)||LTM Sales ($mm)|
|Autohome (NYSE:ATHM)||Chinese auto info site||$120||$172|
|Scorpio Bulkers (NYSE:SALT)||Drybulk shipping||$100||$0|
|Ultragenyx Pharmaceutical (NASDAQ:RARE)||Genetic disease treatments||$86||$0|
|Globoforce (THNX)||Social recognition software||$75||$171|
|Cara Therapeutics (NASDAQ:CARA)||Pain treatments||$60||$11|
|Kindred Biosciences (KIN)||Pet therapeutics||$58||$0|
|Amedica (NASDAQ:AMDA)||Medical devices||$35||$23|
IPO market snapshot
The 195 IPOs in 2013 have raised $46.9 billion and produced an average return of 28%. There have been 70 IPOs in the past 90 days, with total proceeds of $19.8 billion and an average return of 22%. The active IPO pipeline includes 101 companies looking to raise a total of $28.8 billion.