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This past week six IPOs debuted, no IPOs updated terms and at the time of this writing… ten new IPOs were filed.
It was a tumultuous week on the IPO market as five of the six IPOs that came to market closed below their offering prices.
The biggest blow was the biggest IPO of the week — the $2.25bn cash raise of iQIYI Inc (IQ)…the “Netflix of China”. The deal reportedly had double-digit oversubscription levels and priced “conservatively” at the midpoint of the range ($18.00). Market makers worked on matching sellers with buyers for more than an hour and finally brought the Chinese tech unicorn to market with an $18.20 first trade. IQ did achieve a high of $18.52…but quickly and severely broke the offering price with relentless selling into the close. IQ closed its opening session at $15.55 or 13.6% below the offering price marking the worst first-day return on an IPO since Funko Inc. (FNKO). For an IPO with a cash raise greater than $1bn…this was the worst performing IPO on its opening session since ZTO Express (ZTO) closed 15.0% below its offering price on October 27, 2016.
iQIYI Inc wasn’t the only Chinese company to stumble out of the gates. Bilibili Inc (BILI), GreenTree Hospitality Group (GHG) and OneSmart International Education (ONE) each broke their offering prices within the first 10 minutes of trading and the trio closed the week at -4%, -9% and -2% versus their offering prices’, respectively.
Biotech IPOs went 1-for-2 this week as Homology Medicines Inc (FIXX) upsized its offering and priced at the high-end of the range, $16.00. FIXX opened with 7-points of premium but sold off hard in its opening week. The IPO closed the week at $18.70 for a 17% return. The other bio deal of the week, Unum Therapeutics (UMRX), priced at the low-end of the range and opened $0.25 below the $12.00 offering price. UMRX closed its opening session at $11.03 or 8.1% below issue price.
A seventh IPO was scheduled to debut, IBEX Holdings (IBEX), but the lack of demand forced the deal to be postponed “due to market conditions.
The current number of “active” IPOs in the pipeline as of 3/30/18 is 55. Good luck trading!
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