May 2013 IPO Market Update

by: IPO Candy

April was a fair IPO month, with a total of 13 deals priced versus 11 in March. There were 19 new filings in April. A few of them started marketing immediately and priced their deals within the month.

For a full recap of the pricings with brief descriptions and links to the archived presentations, please refer to our April Archive Update post.

There are ten deals in active marketing as we enter the first full week of May. With Q1 earnings behind us, this should be productive month. There is a loud chorus of "sell in May and go away" in many market circles, but nobody knows if this year will be true to that pattern or not. If we do see a summer swoon, a word to the wise would be to start looking for a rebound in early August, since many investors try to get a jump on better expectations of Q3 and Q4 performance.


Here are a few highlights from among the 19 new IPO filings in April:

Data visualization firm Tableau Software (NYSE:DATA) has filed with the coveted "Goldman Morgan dual-lead" mandate. Tableau grew 100% in 2012 to reach $127M in revenue and has been profitable. Most investors will want to own this one, but the question will come down to price.

Elsewhere in the technology sector, we note filings from Marketo (marketing software), Textura (collaboration software), ChannelAdvisor (retail channel sales management) and Liquid Holdings (trading software).

For size, Votorantim Cimentos is the big one filed in April. This Brazilian cement company had revenues of $4.6B and operating profits of $1.2B last year. Earlier this year, Brazil-based offshore driller QGOG attempted to do an IPO, but had to withdraw the offering. But Votorantim is a much bigger company than QGOG and they get some benefit from the long-standing success of comparable company Cemex (CMX) which has a $13.5B market capitalization.

HD Supply is a massive $8B industrial distribution company with a history of near zero operating margins and some ongoing interest expense which generates small net losses. Will equity investors want to buy into an $8B company that doesn't make money?

The consistent flow of biotechnology deals continues in the filings with a few names, including: Epizyme, Portola Pharma, Kamada, and Regado Bioscience. So far most of these types of deals are getting done.


Intelsat (NYSE:I) managed priced their deal in April below the $21 to $25 range at $18 and traded up a bit from there in the aftermarket. At the same time Space Station/Loral finally withdrew their long-awaited IPO. Loral (NASDAQ:LORL) shareholders were asked to be "patient" back in May of 2011 with respect to the spinoff.

Satellites have always been an odd duck in the public equity markets. Stocks like Globalstar (SAT), Inmarsat (OTCPK:IMASF), Echostar (NASDAQ:SATS) and Iridium (IRID) have been around the block more than a few times without demonstrating themselves to be either engines of growth or cash flow machines.

These types of satellite companies seem to combine the aspects of both high-risk with high capital requirements, which isn't a very sweet recipe. It is interesting that there are companies that have instead used the capabilities of satellites to generate more valuable business models. For example, Digital Globe (DGI) and GeoEye (NASDAQ:GEOY) sell access to their databases of satellite images and data to businesses for use in custom applications. Returns are higher and risk is lower with more limited capital needs.

One satellite technology company that has done well is ViaSat (NASDAQ:VSAT). Their focus has been more on a combination of services for high-speed communication that integrates the satellite into a more business-friendly infrastructure solution.

Finally there are satellite-based entertainment companies like Dish Network (NASDAQ:DISH) and Sirius-XM Radio (NASDAQ:SIRI). Both of these companies combine content with consumer branding and marketing as their business model.

We put together a sector ecosystem for this space, because it seems that in the long-term, the need for more communication, location-based services, and navigation will spur demand for advanced satellite-based capabilities if they can be integrated with other services and bring innovative new software and content models into the mix.

We'll publish the ecosystem separately along with full company descriptions and more detail.

Ecosystem Performance

April was a positive month for IPO stock performance. The ecosystem was up 1% for the month. The top 10 names were up 34% and the bottom 10 were down 27%.

TOP 5 in April





Global Geo



Seismic data services




LED semicondutors




Solar rooftops




Anti-cancer drugs




Engine technology

Although down 70% from their IPO price in 2010, Global Geophysical Services got a big bounce from a somewhat encouraging quarterly report where revenues continued to decline (down 13% YoY) but management was able to generate strong cash flow and pay down some debt. This one still looks pretty dicey with special charges and substantial debt on the balance sheet.

SemiLEDS continues to ride a wave of LED lighting enthusiasm despite the fact that the company has negative gross margins and is burning substantial amounts of cash in an industry characterized by high rivalry, huge players and collapsing prices. Buyers today are relying on more foolish buying tomorrow.

Elon Musk is on a roll with strong performance from SolarCity while Tesla (NASDAQ:TSLA) continues to do very well. The strong recent performance of SolarCity seems to stem from the company continuing to execute well while more people see the good sense of integrating generation capability closer to points of use, aka "the smart grid."

Clovis continued to move up after a jump in March following their February 28th quarterly report and articulation of 2013 objectives for their multiple anti-cancer agents.

ClearSign Combustion is a very controversial development stage company with widening speculative interest from both retail investors and short sellers. So far management has been focused on telling the story and fending off accusations of misrepresentation, fraud and total lack of actual market opportunity.

BOTTOM 5 in April








UI for the disabled

Diversity N/W



Minority recruiting








Integration Software

Atossa Genetics



Breast cancer diags

We were ready to drop DynaVox from the ecosystem as a failed company like we did with China Intelligent Lighting (NASDAQ:CIL) last month. But before that happens, it's worth taking another look. Practical interfaces for the disabled to access computers and the resources of the Internet are at least a fundamental need. DynaVox has been an unrelenting disaster since their IPO in April of 2010. Revenues and profits are still declining and the company received a delisting notice from NASDAQ. It doesn't look like there is much hope for this company, but based on what they do, they should be saved.

The ebb of seed bioengineering-company Ceres is lower than we would have ever imagined at the time of their Goldman-led IPO in February of 2012 at $13/share. The stock dropped all the way to $2.35 by the end of April. Revenues are still small and the company is losing money but they have their current market capitalization in cash. It seems so far that Ceres has ended up with a positioning and a business tied more closely to biofuels and Brazil than investors would like.

E2open is a less well-managed version of SPS Commerce (NASDAQ:SPSC), which provides back-end software technologies to enable collaborative ecommerce. E2open had a solid IPO, but reported a rough quarter in April. Shares are still at nearly 5x on a price/sales basis but well below the 9x level SPSC is trading at.

After a big March, shares of Atossa Genetics almost had to give some of those gains back as the developments (some progress on having their tests used and a $30M financing) faded into the background.

The Pipeline of Deals and Events


There are thirteen deals in active marketing now with the majority expected to price the week of May 7th so we are starting the month on a strong note.

Lockup Expirations

Some notable lockup agreements are scheduled to soon expire, including: Atossa Genetics , Ruckus Wireless (NYSE:RKUS), Alon USA Partners (NYSE:ALDW), YY Inc. (NASDAQ:YY), Western Gas Equity (NYSE:WGP), and SolarCity.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.