The IPO market could be poised to heat up after a very slow first half of the year. The number of companies going public was at a seven-year low in Q1 and was still below average in Q2 despite some improvement.
Analysts think that the solid average returns on this year's batch of IPOs and a strong debut for Twilio in the tech sector is on the verge of breaking the "logjam" of companies stuck in a holding pattern.
Some of the notable names floating out there include Uber (Private:UBER), Snapchat (Private:CHAT), Airbnb (Private:AIRB), Neiman Marcus (Pending:NMG), Univision (Pending:UVN), SoulCycle (Pending:SOULC), and Pinterest (Private:PINIT).
Tech IPOs are missing in action this year as Silicon Valley startups continue to raise capital through private investors.
In a recent survey, only 17% of Silicon Valley companies indicated that an IPO was a goal, while at SWSX the percentage of tech executives that answered "no way" to an IPO plan was all the way up to 42%.
Extra costs and the pressure to meet quarterly estimates are two major factors in the aversion to the public route from the sector.
Uber (Private:UBER) CEO Travis Kalanick summed up the stance when he told CNBC that he aimed for his company to have an IPO as late as possible.
Global IPO activity volume fell nearly 40% to just over $12B in the first quarter, marking its weakest start to the year since the financial crisis.
Lower oil and commodity prices, the strength of the U.S. dollar and economic volatility has led investors to adopt a "wait and see" approach or seek alternatives such as M&A, according to EY's latest Global IPO Trends report.
Executive Director Martin Steinbach adds that the slowdown is evident in all regions across the world, but that it's important to note that there is still, on average, one IPO each day.
No IPOs priced this week to mark the sixth week of the year with no activity.
Only four IPOs have made it to market for combined proceeds of just $436M, notes market intelligence firm Ipreo Capital Markets.
The IPO class of 2015 isn't faring well through the volatile market. Through the end of last week, the 170 IPOs from last year average a -22% return (-31% aftermarket return). 74% of the 2015 IPO stocks trade below their issue price.
Of the almost 175 companies that made their U.S. stock-market debuts in 2015, more than 70% are now trading below their IPO prices (on average their shares are down about 20%).
A downturn in investor sentiment, which began gradually last summer then suddenly became severe earlier this year has been felt hardest by the market's newest companies, creating a hostile environment for new IPOs.
There were no U.S. initial public offerings in January, and there have been only four new listings this month.
The IPO market has been relatively quiet for the first two weeks of 2016 amid market turmoil as a number of companies on the IPO watch list (Univision, Neiman Marcus, Albertsons) remain in a holding pattern for their official filing. No deals price this week and no deals over $300M are expected for the next two per Ipreo Capital Markets.
A risk-off sentiment has hurt the Renaissance IPO ETF (NYSEARCA:IPO) which has doubled the loss of the S&P 500 so far this year with a 15% drop.
Renaissance Capital reports that 169 IPOs raised $30B in 2015 to mark a six-year low for IPO action. Last year, 275 deals generated over $85B in proceeds.
The biotech sector was one of the only pockets of high IPO activity during a very weak second half of the year. Tech IPOs were downright scarce, with proceeds down 87% Y/Y.
The average aftermarket return of -15.4% is the worst performance for IPOs since 2011.
Notable IPOs on file for a potential 2016 debut include Neiman Marcus Group (Pending:NMG), Univision (Pending:UVN), Albertsons (NYSE:ABS), Vizio, SoulCycl (OTCQB:SOUL), and Station Casinos. Most analysts don't expect Federal Reserve rate increases to be a huge factor as companies weigh when to file.
An IPO watchlist from Renaissance Capital of private companies includes Uber (Pending:UBER), Dropbox (Pending:DROPB), US Foods, MGM Growth Properties (MGM's REIT), and Airbnb (Pending:AIRB).
IPO stocks have been battered by recent market volatility as many investors reign in expectations and pivot to a risk-off stance.
Renaissance Capital notes 60% of IPOs are now below their IPO price.
Consumer IPO stocks have been one of the hardest hit sectors with Blue Buffalo Pet Products (BUFF +0.2%), Ollie's Bargain Outlet Holdings (OLLI +3.8%), Amplify Snack Brands (BETR +1.4%), Wingstop (WING -0.6%), Bojangles (BOJA +0.3%), El Pollo Loco (LOCO +2.6%), and Fogo De Chao (FOGO +0.8%) all disappointing by varying degrees. Planet Fitness (PLNT +2.5%) and Del Taco (TACO +1%) have held better than their IPO peers.
The Renaissance IPO ETF (NYSEARCA:IPO) is down 15.2% YTD vs. the S&P 500 -8%.
The regenerative medicine company focuses on developing products in the musculoskeletal area. Its lead product is NeoCart, an autologous cartilage implant for the repair of cartilage damage in the knee. It is currently in Phase 3 development.
The first step in the process is the procurement of cartilage cells by a surgeon from the non-weight-bearing area of the patient's femur. After expanding, the cells are infused into the company's proprietary scaffold and then incubated in its Tissue Engineering Processor which mimics the conditions in the joint. When NeoCart is implanted, a bioadhesive is used to anchor it in place.
Enrollment in a 245-patient Phase 3 trial is underway. The primary efficacy endpoint is clinical superiority over the current standard of care, microfracture, at 12 months post implant.
Histogenics has yet generate meaningful revenue. Its net loss in 2013 was $25.7M and $23.7M in the first nine months of 2014.
CB Pharma Acquisition Corp. (CNLMU) files for an IPO of 4M units priced at $10 per unit. Each unit consists of one share of common stock, one right to purchase 1/10 of a share of common stock on the consummation of an initial business combination and one warrant to purchase 1/2 of one share of common stock at a full-share price of $11.50.
The firm is a blank check company formed by Coronado Biosciences (CNDO +0.5%). It will seek business combinations via mergers, share exchanges, asset acquisitions, share purchases, recapitalizations or reorganizations.
It has 18 months from the consummation of this offering to complete its initial business combination (up to 21 months in certain circumstances) or it will liquidate the trust account, distribute the proceeds to shareholders and dissolve.
Per NASDAQ listing rules, the target business for the initial combination must have a fair market value equal to at least 80% of the value of the trust account.
The company develops visual prosthetics to restore some functional vision to blind patients. Its lead product is the Argus II System for the treatment of outer retinal degenerations such as retinitis pigmentosa. It is the only retinal prosthesis approved by the FDA and the first one approved anywhere in the world.
San Diego, CA-based Neothetics (NEOT) is set for its IPO of 4.3M shares of common stock at $13 - 15.
The clinical-stage specialty pharmaceutical firm develops therapeutics for the aesthetic market with an initial focus is on localized fat reduction and body contouring. Its lead product candidate is LIPO-202 (salmeterol xinafoate for injection) for the reduction of central abdominal bulging due to subcutaneous fat in non-obese patients (pot-belly). The company expects to conduct two Phase 3 trials in 1H 2015 and have top-line results by the end of 2015. If successful, it will file an NDA in 2H 2016.