The IPO market ended the first half of the year on a sour note. Alumis Inc (ALMS) opened for trading $2.50 below the $16.00 issue price and has barely had a pulse in two sessions of trading. Unfortunately, its not even the worst biotech of the year. That honor goes to Metagenomi Inc’s (MGX) debut at $10.25 vs. $15.00 issue price. So where does ALMS go from here?
In reference, MGX closed Monday’s session at $4.26 or 71.6% below issue.
The biotech sector has nearly always been a subjective area of IPO investing — a love it or hate it market – and it seems to be no different in 2024. There have been 10 biotech deals in 2024 and exactly half opened positive (those five averaging a return of 37% above issue).
As IPO investors are accustomed to, its not the winners that make a “good year” but avoiding the losers. IPOs that are “losers” historically have much larger allocations than winners. Given the nature of biotech IPOs, retail investors may be beginning to think the “juice isn’t worth the squeeze” when dabbling in the sector as a whole.
It’s one thing for the underwriters to misprice an offering by $0.50 or $1.00 but for disasters in the sector to occur to this scale is unacceptable.
Reddit Wins the First Half
The most notable IPO of the first half of the year claims the crown for top performer — Reddit Inc (RDDT). The IPO ended Monday’s session +93% versus issue providing ample “aftermarket” returns following a return of 38% at open versus the $34.00 issue price. Reddit raised $748m which was the fifth largest cash raise in 2024 behind Viking Holdings ($1.5b), Amer Sports ($1.36b), Waystar Holdings ($967m) and Rubrik Inc ($752m).
IPO Returns
The first half of the year ended with 38 IPOs coming to market for a total cash raise of $12.97b. The average gain at first trade was 10.0% and the average of the 38 IPOs as of the close on Monday (7/1) was just +3.9% above issue. In comparison, 2023 and 2022 had 28 and 20 IPOs, respectively, for their entire calendar years. Our sources indicate that IPO activity will be continuing at a similar pace in the second half of the year. There are a substantial amount of private-equity backed companies who will be looking to test the IPO market. Valuation will be “critical” with these type of transactions.
IPO Boutique Performance
‘5’ Rated Deals: N/A
‘4’ Rated Deals: Six IPOs; Average Return of 43.8% at Open
‘3’ Rated Deals: 16 IPOs; Average Return of 8.8% at Open
‘2’ Rated Deals: 11 IPOs; Average Return of -1.5% at Open
‘1’ Rated Deals: Five IPOs; Average Return of -1.6% at Open
Historically, IPO Boutique ‘4’ rated deals open +28% at open; ‘3’ Rated Deals Open +11%; ‘2’ Rated Deals open +2%
What We’re Reading
Debate Fallout: Biden wages desperate bid to save his reelection campaign after debate debacle
Election Direction: Wall Street Maps Out What a Trump Win Would Mean for Bonds
Boeing Acquisition: Boeing agrees to buy fuselage maker Spirit AeroSystems in $4.7 billion deal
English
Arabic
Chinese (Simplified)
Dutch
French
German
Italian
Portuguese
Russian
Spanish