Five Below (FIVE), which priced its IPO at $17.00 after the close on Wednesday, finished trading on Thursday up $9.50 at $26.50, representing a first day pop of 56%. Five Below's first day gain is the seventh highest in 2012 and the highest since Splunk (SPLK) returned 109% in an April 18 offering. Francesca Holdings (FRAN), a high-growth retail comparable that went public nearly one year ago today, returned 63% in its first day of trading and has posted further gains in the aftermarket (now up 85%).
Five Below's performance reflects IPO investors strong demand for growth. Indeed, 8 of the top 10 IPO debuts year-to-date were easily understood growth companies, all in the tech and consumer industries. In most cases, these companies have garnered valuation multiples well in excess of their public comparables.
While overall aftermarket returns have been mixed, this trend bodes well for upcoming high-growth companies including firewall software provider Palo Alto Networks (PANW), travel website operator KAYAK (KYAK), organic grocery chain Natural Grocers by Vitamin Cottage (NGVC) and supply chain management software company E2open (EOPN). Both Palo Alto and KAYAK are set to price tonight. Natural Grocers is set to price on Tuesday, July 24 and E2open on Thursday, July 26.