U.S. IPO Weekly Recap: U.S. Tech IPOs On A Tear As Elastic Bounds 94%

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Includes: ARYAU, CCH.U, CTACU, EDTXU, ENVN, ESTC, GH, KOD, ORTX, STNE, TME, TWST, UPWK
by: Renaissance Capital IPO Research

Four IPOs raised $767 million. Even as the broader IPO market traded off, all four companies this week were positive and three popped 40% or more. Big data software provider Elastic (NYSE:ESTC) priced well above its range and flew up 94%. With almost $200 million in sales, Elastic's 79% growth puts it in a rare echelon of software companies. Freelancer marketplace Upwork (NASDAQ:UPWK) gained 40% and next-gen diagnostics company Guardant Health (NASDAQ:GH) was up 54%. For now, the unicorns still appear to be in high demand.

Four blank check companies also completed their public offerings to raise $780 million. There have been 37 SPACs this year, surpassing the full-year 2017 (34) and already marking the biggest year since 2007.

The broader IPO market pulled back this week, particularly the high-flying tech sector. The IPO Index slumped 5.4%, compared to the S&P 500's -1.0%. As of Friday, just 53% of 2018 IPOs trade above the offer price, the lowest point since April. The VIX Volatility Index finished the week near 15, near where IPO activity starts to be impacted.

The US IPO pipeline gained its only billion-dollar deal: China's Tencent Music (TME) filed for a US IPO that could raise $2 billion. Other notable filings included Brazilian payments processor StoneCo (NASDAQ:STNE) and deepwater E&P EnVen Energy (ENVN).

8 IPOs During the Week of October 1st, 2018

Issuer
Business

Deal
Size

Market Cap
at IPO

Price vs.
Midpoint

First Day
Return

Return
at 10/05

Elastic

$252M

$3,165M

31%

+94%

+94%

Provides open-source data search and visualization software.

Guardant Health

$238M

$1,707M

19%

+69%

+54%

Makes non-invasive blood-based cancer diagnostics tests.

Upwork

$187M

$1,870M

36%

+41%

+40%

Marketplace for businesses to hire and manage remote freelancers.

Kodiak Sciences (NASDAQ:KOD)

$90M

$375M

-29%

+2%

+4%

Phase 1 biotech developing therapies for common ophthalmic diseases.

ARYA Sciences Acquisition (NASDAQ:ARYAU)

$125M

$156M

0%

+2%

+2%

Blank check company formed by Perceptive Advisors to acquire a healthcare business.

Collier Creek (NYSE:CCH.U)

$400M

$496M

0%

+2%

+2%

Blank check company led by Pinnacle Foods Chairman Roger Deromedi.

EdtechX Holdings Acquisition (NASDAQ:EDTXU)

$55M

$69M

0%

+0%

+0%

Blank check company formed by IBIS Capital to acquire an education technology business.

ChaSerg Tech Acquisition (CTACU)

$200M

$256M

0%

n/a

+0%

Blank check company formed by tech veterans to acquire a technology company.

8 Filings During the Week of October 1st, 2018

Issuer
Business

Deal
Size

Sector

Lead
Underwriter

Axonics Modulation Tech (NASDAQ:AXNX)

$86M

Health Care

BofA ML

Commercializing a neural implant for overactive bladder and incontinence.

Uranium Trading (UTC)

$58M

Materials

B. Riley FBR

Newly-formed vehicle to invest in the civil uranium market.

Orchard Therapeutics (NASDAQ:ORTX)

$173M

Health Care

JP Morgan

Developing stem cell gene therapies for rare diseases.

EnVen Energy

$300M

Energy

Citi

E&P focused on deepwater oil projects in the Gulf of Mexico.

Twist Bioscience (NASDAQ:TWST)

$86M

Health Care

JP Morgan

Manufactures synthetic genes and other DNA-based products.

Alberton Acquisition (NASDAQ:ALACU)

$100M

SPAC

Chardan

Hong Kong-based blank check company.

Tencent Music

$1,000M

Technology

BofA ML

China's largest online music-streaming service.

StoneCo

$100M

Technology

Goldman

Brazilian cloud-based online payment processor.

Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.