The IPO Buzz: Beyond Snap

Snap (SNAP) popped for an opening-day gain of 44 percent and closed the week with a jump of 59.4 percent from its IPO price. In came the phone calls from the media: “Will this spark the IPO market?”

To date, all the magic fairy dust has been sprinkled on the market for the IPOs to perform. The records show the current IPO market dried up during the fall of 2015 and has limped along following a soaring stock market. Note: The three major U.S. stock market indexes closed on March 1, 2017, at all-time highs – with the Dow Jones industrial average ending above 21,000 for the first time.

Here’s what it normally takes to light those IPO flames: First, a brand-name company goes public. The IPO must sparkle in the aftermarket. If it flops, there is no hope for any of the others. In the meantime, all of its privately held major competitors stand in the IPO wings – watching. Success will encourage them to step onto the IPO stage, but it takes time for this to happen. It doesn’t all unfold in a just a few days.

Once the ball gets rolling, the second line (the competitors of the brand-name IPO) moves forward to the IPO calendar. And, finally, everybody else wades into the IPO pool.

Snap Happy

Let’s take a closer look at Snap. It priced its IPO of 200 million shares at $17 each, above the $14-to-$16 filing range. The pre-pricing chatter around the Street was $20.

Snap came to market at a discount. The key was pricing – and it worked. Snap’s IPO opened at $24 on Thursday, March 2, closed its first day of trading at $24.48, and ended on Friday, March 3, at $27.09.

Revisiting Hamilton Lane

But last week’s IPO market was not a one-trick pony.

Hamilton Lane (HLNE), an investment advisory firm, priced its IPO of 11.9 million shares at $16 each on Tuesday evening, Feb. 28. It started trading Wednesday, March 1. Hamilton Lane’s IPO closed its opening day at $18.02; on Friday, the stock ended at $18.72 – UP 17 percent from its IPO price.

From Soft Wear to Software Solutions

Now let’s flip back to the present. This week’s IPO calendar has two deals looking to raise $425 million. The word around the Street is that each is said to have a few eyeballs looking at them. The deals are J.Jill (JILL – proposed) and Presidio (PSDO – proposed).

J.Jill, based in Quincy, Massachusetts, is a nationally recognized women’s apparel brand known for its knit tops, pants and other wearable clothes in size ranges that include petite, women (plus size) and tall. The company focuses on affluent customers from the ages of 40 to 65 with an average annual household income exceeding $150,000. J.Jill offers its products in 275 stores in 43 states, as well as online and in catalogs.

J.Jill plans to offer about 11.7 million shares at $14 to $16. Pricing is expected on Wednesday evening, March 8, to trade Thursday morning, March 9. Note: All the shares are being offered by a selling shareholder.

Presidio, based in New York City, is a provider of IT solutions to the middle market. The company describes its business this way, according to its website: “Our Digital Infrastructure, Cloud and Security solutions enable our almost 7,000 middle market, enterprise and government clients to take advantage of new digital revenue streams, omnichannel customer experience models, and the rich data insights generated by those interactions.” Presidio delivers its solutions through a suite of professional services, including strategy, consulting, design and implementation.

Presidio plans to offer about 16.7 million shares at $14 to $16. Pricing is expected on Thursday evening, March 9, to trade Friday morning, March 10. Note: All the shares are being offered by a selling shareholder.

Only the Lonely

For the week of March 13, the IPO calendar has one deal. But that could change when the SEC’s filing window opens for business on Monday morning.

Stay tuned.

Disclosure: Neither the author nor anyone else on the staff has a position in any stocks mentioned, nor do we trade or invest in IPOs. The author and staff do not issue advice, recommendations or opinion.