Everyone wants a date with Datto. The cloud company is generating a lot of early buzz from IPO investors. Datto Holding Corp. (MSP proposed) is set for its IPO debut on Wednesday, followed by McAfee Corp. (MCFE proposed), the antivirus software company, and Guild Holdings Co. (GHLD proposed), the parent of a nonbank mortgage lender – both expected to start trading on Thursday.
It’s a slim IPO Calendar so far this week: Just six deals are on tap – and two of those are SPACs. Bankers expect to raise about $1.7 billion.
U.S. stock futures rose on Monday, along with stocks in Europe and Asia, on hopes for progress on stimulus talks in Washington, Bloomberg reported. Monday marks the 33rd anniversary of the 1987 stock market crash.
To revisit last week: Eargo (EAR) was the stealth winner, scoring a moonshot at its opening trade. Eargo, which makes and sells rechargeable hearing aids direct to consumers online, priced its upsized IPO of 7.9 million shares at $18 on Thursday night, Oct. 15. The IPO was priced $2 above its $14-to-$16 range on more shares – 7.9 million, up from 6.7 million in the prospectus.
Eargo’s stock doubled in price to open at $36 on Friday, Oct. 16, on the NASDAQ. (A moonshot occurs when a stock jumps 100 percent, doubling its IPO price, on its first day of trading.) Eargo ended its first day as a publicly traded company with its stock at $33.68, up 87.11 percent from its IPO price.
Array Technologies Inc. (ARRY), the maker of solar panel trackers, treated IPO investors to some fun in the sun last week. Bankers sold 47.5 million shares of Array at $22 on Wednesday night, Oct. 14, a day after the deal’s size was increased in an SEC filing to 45 million shares while its price range remained at $19 to $21
Array opened on Thursday, Oct. 15, on the NASDAQ at $29.50, up 34.09 percent from its IPO price at $22, and closed its first day of trading at $36.45, up 65.58 percent. By the close on Friday, Oct. 16, Array was at $38.95, up 77.05 percent for the week.
Riding the Cloud
If you’re not a data geek, Datto was probably not on your radar. But that changed last week after Datto’s bankers launched the IPO. Investors’ early response was described as enthusiastic. One successful trader put it this way:
“It’s the cloud, baby.”
Datto Holding makes cloud security software for data backup and other services, which it sells by subscription to managed service providers (MSPs) that cater to small and medium businesses. The company had filed confidentially to go public a few months ago, Bloomberg reported on July 15. Datto’s public S-1 followed on Sept. 29, SEC filings showed, and the company disclosed its IPO terms in an S-1/A filing on Oct. 14.
Monday night pricing for Tuesday trading:
MingZhu Logistics Holdings (YGMZ proposed) is a Chinese trucking company based in Guangdong.
This is a small-cap deal of 3.0 million shares at $4 each to trade on the NASDAQ. The sole manager is ViewTrade Securities.
Two SPACs – Bull Horn Holdings, a carryover from last week, and Helix Acquisition, new to the IPO Calendar – are also expected tonight.
Bull Horn Holdings (BHSEU proposed) is a sports and entertainment-focused SPAC based in Miami Beach, Florida. This is an IPO of 7.5 million units at $10 each. Imperial Capital is the lead manager.
Helix Acquisition (HLXA proposed) is a healthcare-focused SPAC based in Boston. This SPAC IPO is unusual because the special-purpose acquisition company is offering shares of common stock, and not units, which are the norm for SPACs, also known as blank check companies.
The Helix Acquisition IPO consists of 10 million Class A ordinary shares at $10 each. Jefferies is the sole manager.
Tuesday night pricing for Wednesday trading:
Datto Holding Corp (MSP proposed) of Norwalk, Connecticut, states it purpose clearly: ‘Our mission is to create enterprise-grade technology for small and medium businesses delivered through our growing global network of managed service providers.” The company’s proposed stock symbol is “MSP,” a tribute to its customer base of over 17,000 MSP partners, according to the prospectus. Vista Equity Partners, a private equity company, owns Datto.
This is an IPO of 22 million shares at $24 to $27 each to trade on the New York Stock Exchange. If the IPO is priced at the mid-point of that range, the company will have a market cap of about $4 billion. Morgan Stanley, BofA Securities, Barclays and Credit Suisse are the joint book-runners.
Note: Datto Holding Corp. earned net income of $4.6 million on revenue of $493.0 million in the last 12 months.
Wednesday night pricing for Thursday trading:
McAfee Corp. (MCFE proposed) is the biggest household name in antivirus software. The company has gone back and forth between public and private ownership since it was founded in 1987. TPG Capital, a private equity firm, bought a majority stake in McAfee from Intel Corp. in 2016.
This is an IPO of 37 million shares at $19 to $22 each to trade on the NASDAQ. If the IPO is priced at the mid-point of that range, McAfee will have a market cap of about $3.4 billion. Morgan Stanley, Goldman Sachs, TPG Capital BD, BofA Securities and Citigroup are the joint book-runners.
Note: McAfee had a net loss of $59 million on revenue of $2.75 billion over the last 12 months.
Some investors will take note of McAfee’s debt, pegged at $4.7 billion as of June 27, as Luisa Beltran reported on Oct. 13 in Barron’s.
Guild Holdings Co. (GHLD proposed) is the parent of Guild Mortgage, founded in 1960. The San Diego-based nonbank mortgage lender says it is among the longest-operating seller-servicers in the United States.
This is an IPO of 8.5 million shares at $17 to $19 each to trade on the NYSE. It the IPO is priced at the mid-point, Guild Holdings will have a market cap about $1.08 billion. Wells Fargo Securities, BofA Securities, J.P. Morgan and JMP Securities are the joint book-runners.
Note: Guild Holdings reported net income of $69.4 million on revenue of $1.08 billion over the last 12 months.
The successful IPO of Rocket Companies (RKT) in August opened the door to a wave of mortgage bankers looking to go public, according to Bradley Finkelstein of National Mortgage News. Caliber Home Loans, AmeriHome and Finance of America are among the nonbank mortgage lenders that are waiting in the IPO wings. Note: Caliber Home Loans and AmeriHome are planning traditional IPOs, according to their filings with the U.S. Securities and Exchange Commission. Finance of America, which is backed by Blackstone, is planning to go public via a merger with Replay Acquisition, a SPAC, aka a blank check company, as Corrie Driebusch reported on Oct. 13 in The Wall Street Journal.
(For more information on these companies, please see the IPO profiles on the IPOScoop.com website.)
Week of Oct. 26
Gatos Silver (GATO proposed), a Mexican silver mining company, is the only IPO scheduled so far for October’s final week. But that could change in an instant – and more names could land on this week’s IPO Calendar as well – after the SEC’s filing window opens again for business on Monday morning, Oct. 19.
(Note: Never trade on proposed symbols. You might wind up owning something on the OTC Bulletin Board.)
Disclosure: Nobody on the IPOScoop.com staff has a position in any stocks mentioned above, nor do they trade or invest in IPOs. The IPOScoop.com staff does not issue advice, recommendations or opinions.
Disclaimer: A SCOOP Rating (Wall Street Consensus of Opening-day Premiums), is a general consensus taken, at press time, from Wall Street and investment professionals concerning how well an IPO might perform when it starts trading. The SCOOP Rating does not reflect the opinions of anyone associated with IPOScoop.com. The SCOOP ratings should not be taken as investment advice. The rating merely reflects the opinion of the professionals at the time of publication and is subject to last-minute changes due to market conditions, changes in a specific offering and other factors, such as changes in the proposed offering terms and the shifting of investor interest in the IPO. The information offered is taken from sources we believe to be reliable, but we cannot guarantee the accuracy.