Everybody from Silicon Valley to Wall Street will be watching this week’s IPO calendar. The year’s first unicorn plans to make its debut. If the deal works – and if the past is any indication of the future – there could be a floodgate of billion-dollar babies bouncing into the marketplace.
The Deal
Twilio (TWLO – proposed), a cloud communications provider, plans to price 10 million shares at $12 to $14 each to raise $130 million. The offering’s size is somewhat below 2016’s average IPO of $212 million, according to U.S. Securities and Exchange Commission filings. But there is much more to this IPO.
This is where things get interesting. After the offering, Twilio expects to have 82.2 million shares of Class A and Class B common stock outstanding at a market value of $1.06 billion. Most of that stock will be Class B shares held by insiders.
That makes it a unicorn – a private company with a market valuation of $1 billion or more.
For that matter, CB Insights, a provider of data on private companies, lists 169 unicorns with a total cumulative value of $609 billion. Twilio at $1.1 billion is No. 98 on the list.
Worth noting: The word is out there that this IPO is “in play.”
The Past
To illustrate how the U.S. stock market affects the new-issue calendar and what it takes to spark an IPO market leader, let’s go back to 1998 for a classic example.
On July 20, 1998, the NASDAQ Composite Index closed UP 28.3 percent for the year to date, and the IPO calendar for the year was flying. The IPO pipeline had turned out 326 deals by the end of August for a monthly average of nearly 41 deals in 1998, according to SEC filings.
Then the bear came to town. The NASDAQ tanked. By Sept. 4, 1998, the NASDAQ had fallen 22.2 percent from its high on July 20. The September 1998 calendar turned out only three IPOs – a steep drop from a monthly average of 41. But one was eBay (EBAY).
Finding a Leader
On Sept. 24, 1998, bankers priced eBay’s IPO and it scored an opening-day gain of 163.2 percent. That opened the door to the Internet bubble of 1999 and 2000.
Now back to the present: The unicorn, Twilio, is on the IPO calendar. If it works, the offering could very well open the door to a list of 168 other unicorns.
Now let’s take a closer look at Twilio.
Twilio, based in San Francisco, offers a cloud computing platform that lets software developers integrate phone calls, internet protocol voice communications, text messaging, videos and authentication capabilities into their own web, mobile and phone applications. Among Twilio’s customers are Airbnb, Uber, eBay and Nordstrom. Formed in 2008, Twilio has about 567 employees.
Bankers plan to price 10 million shares at $12 to $14 each on Wednesday evening, June 22, to trade Thursday morning, June 23.
Note: Certain existing holders have indicated an interest in buying up to 1.5 million shares of Class A common stock in this initial public offering.
Healthcare Trio
Rounding out this week’s calendar are three new faces at the IPO window. All are from the healthcare sector. Since March, there has been a developing trend in setting pricing terms for healthcare deals. Consider: Five IPOs originally planned to price their IPOs at $14 to $16 per share. None worked out that way. Four of the five were cut in price to get out the door and the other was postponed.
The three healthcare deals on this week’s calendar are:
Gemphire Therapeutics (GEMP – proposed), based in Northville, Michigan, is a clinical-stage biopharmaceutical company developing therapies to treat dyslipidemia – high levels of fat in the blood (triglycerides) or bad cholesterol (low-density lipoprotein cholesterol, or LDL-C) – or both. People with this condition are at a higher risk for a heart attack or a stroke.
Note: Certain existing investors have indicated an interest in buying up to $10 million worth of common stock in this offering.
Bankers plan to price 3.75 million shares at $11 to $13 each on Wednesday evening, June 22, to trade Thursday morning, June 23.
Selecta Biosciences (SELB – proposed), based in Watertown, Massachusetts, is a clinical-stage biopharmaceutical company developing biodegradable nanoparticles to treat gout.
Note: Certain existing investors have indicated an interest in buying up to $40 million worth of common stock in this offering.
Bankers plan to price 4.26 million shares at $14 to $16 each on Tuesday evening, June 21, to trade Wednesday morning, June 22.
Tactile Systems Technology (TCMD – proposed), based in Minneapolis, is a medical technology company that develops and provides compression medical devices to treat chronic diseases, such as chronic swelling of the arms or legs, at home.
Bankers plan to price 4 million shares at $14 to $16 each on Tuesday evening, June 21, to trade Wednesday morning, June 22.
Looking into the week of June 27, the IPO calendar has two deals aiming to raise about $113 million. Nevertheless, things can happen quickly on Monday mornings in the IPO Valley.
Stay tuned.
Disclosure: Neither the author nor anyone else on the IPOScoop.com staff has a position in any stocks mentioned, nor do we trade or invest in IPOs. The author and IPOScoop.com staff do not issue advice, recommendations or opinion.