The IPO Buzz: Frost Bite

Friday’s powerful stock market rally wasn’t strong enough to erase the bone-chilling losses racked up earlier in the week. On Thursday, the major U.S. stock indexes hit their 52-week lows. Even with Friday’s big surge, U.S. stocks ended the week still in correction mode. That took its toll on the IPO calendar. The pending deals disappeared like tender plants accidentally left out on the porch in the biting wind.

Looking into this week, the IPO calendar has just one deal – a small-cap offering of about $10 million that has been carried over from January. It’s only a four-day work week, with the U.S. stock market closed on Monday, Feb. 15, for Presidents Day. Many on Wall Street are probably more than thankful for that.

Let’s take a closer look at the stock market’s icy conditions.

Correction Scorecard: The Dow Jones Industrial Average closed Friday, Feb, 12, 2016, at 15,973.84, DOWN 12.8 percent from its May 19, 2015, closing high, and the S&P 500 closed at 1,864.78, DOWN 12.5 percent from its May 21, 2015, closing high. Both were nine months into their respective downdrafts. The NASDAQ Composite Index closed at 4,337.51, DOWN 16.9 percent from its July 20, 2015, closing high. The NASDAQ was seven months into its downdraft.

Out in the Cold

Against the U.S. stock market’s dismal backdrop, the IPO calendar did not fare any better. Five of last week’s eight scheduled offerings were “postponed due to market conditions.” One was pushed off into this week. And what happened to the other two that got priced? They tanked. It’s worth noting that each of those two IPOs had insiders buying shares in the offerings, but that did not help them in the aftermarket.

AveXis   (AVXS) is a clinical-stage gene therapy company developing novel treatments for patients with rare and life-threatening neurological genetic diseases. Its IPO of 4.75 million shares was priced at $20 each on Wednesday evening, UP from 4.25 million shares at $19 to $21 each. The stock opened Thursday morning at $18.02 and closed the week at $17.80, DOWN 11 percent from its IPO price. Note: Insiders bought about $19 million worth of the IPO on an indication of interest of $30 million.

Proteostasis Therapeutics (PTI) is a biopharmaceutical company developing novel therapeutics to treat diseases caused by an imbalance in the proteostasis network, which is a network of proteins. The company’s initial therapeutic focus is on cystic fibrosis, the most common fatal inherited disease in Caucasians; there is no cure. Its IPO of 6.25 million shares was priced at $8 each on Wednesday evening, DOWN from 3.85 million shares at $12 to $14 each. The stock opened Thursday morning at $8 and closed the week at $6.18, DOWN 22.8 percent from its IPO price. Note: Insiders purchased about $20.2 million worth of the IPO on an indication of interest of $30 million.

In past years, corrections have come and gone; ditto for bear markets. This, too, shall pass. In the background, the IPO market has always bided its time until the U.S. stock market recovered, creating conditions conducive to the issuance of new issues once again.

Gold Ahead

This time around, we have a glimpse at the future – and it looks interesting. Waiting in the wings are some golden names.

Airbnb is an online platform for people to list, discover and book unique accommodations around the world, ranging from an apartment for a night, a castle for a week or a villa for a month in more than 35,000 cities and 190 countries. The company is based in San Francisco.

Dropbox is a cloud storage provider that lets users store and access photos, documents and videos in a secure way on any device, whether that’s a PC, a tablet or a smartphone, and share the files easily with others. Based in San Francisco, Dropbox has more than 400 million registered individual users. Among its business customers are many Fortune 500 companies, including News Corp., Hyatt Hotels, Under Armour and Yahoo! Dropbox has users in over 200 countries and supports work in 15 languages, according to the company.

Palantir Technologies is a Palo Alto, California-based software and data analysis company credited with helping the U.S. government track down Osama bin Laden. The FBI, the CIA, the U.S. Department of Defense, the IRS and the U.S. Securities and Exchange Commission are among its clients. In-Q-Tel, the CIA’s venture capital arm, has been cited as one of Palantir’s early investors. Named after the magic crystal ball in “The Lord of the Rings,” Palantir provides software, data-mining technology and analytical services that help its customers detect and eliminate fraud; strengthen defenses against cyber-attacks; respond quickly to disasters and outbreaks of disease; discover insider trading and stop human trafficking, as well as improve legal intelligence, protection of intellectual property and research and development of new drugs.

And then there is the long anticipated Uber IPO.

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 opinions.