This week closes out the August IPO market and marks the end of the first eight months of 2017. The new-issue calendar was clean and green last week – and it looks to be the same for this week, but not to worry. This is a seasonal event. Wall Street investment bankers like to take time off as summer winds down so the pre-Labor Day break is traditional.
Nevertheless, let’s take an early look at 2017 and consider some interesting tidbits about what happened.
The 2017 scorecard showed 87 IPOs were priced during the first eight months, according to U.S. Securities and Exchange Commission filings. That is a favorable comparison to last year when 51 IPOs got priced during the first eight months of 2016. On a percentage basis, the IPO volume for 2017 is UP 70.6 percent for the year to date compared with the same point in 2016.
(Note: These figures exclude unit offerings, bank conversions, “best efforts” offerings, Regulation A+ offerings (or Reg A+), blank checks, closed-end funds, companies trading on the OTC markets moving over to the NASDAQ and foreign-traded securities making their debuts in the U.S. capital markets. The latter are public offerings. Investors can buy the underlying shares on foreign exchanges before their U.S. pricing dates.)
Worth noting: IPOScoop.com inserted a Regulation A+ reference to the note above due to the recent media attention. See the following for an explanation: Reg A+. For the year to date, the four Reg A+ deals that went public were on a “best efforts” offering basis – and IPO services usually don’t follow this type of investment.
Delving into the Details
Now let’s take a look at this year’s final prospectuses versus earlier filings. We noted the following:
- 31 IPOs were priced below their previous prospectuses
- 32 IPOs were priced within their previous prospectuses
- 24 IPOs were priced above their previous prospectuses
And the first-day’s gains were:
- Priced below range: UP 5.09 percent
- Priced within range: UP 3.27 percent
- Priced above range: UP 19.34 percent
Those priced in the 2017 “below range” group showed a sharply higher aftermarket gain than historical figures.
An IPO History Lesson
From the IPOScoop.com data book: From January 2001 through August 2017, a total of 2,421 IPOs were priced. Here are the pricing details:
- 869 IPOs were priced below range
- 790 IPOs were priced within range
- 762 IPOs were priced above range
And the first-day’s gains for all 2,421 IPOs during that span of nearly 17 years were:
- Priced below range: UP 1.90 percent
- Priced within range: UP 8.09 percent
- Priced above range: UP 28.61 percent
Now back to 2017 and the difference between those “priced below range” this versus historical performance.
IPO Pop Stars of 2017
Several of 2017’s IPOs were priced well below range and sparkled in the aftermarket. There was a reason. Bankers got what they wanted. It was to cut the price and, hopefully, get an aftermarket pop. It worked for some. Let’s turn to IPOScoop.com’s 2017 Pricings and consider the following, as of Friday, Aug. 25, 2017:
No. 1 on 2017’s IPO aftermarket performance list was Akcea Therapeutics (AKCA). The company priced its IPO of 15.6 million shares at $8 each, DOWN from 9.62 million shares at $12 to $14 each. On a price-per-share basis, its price had been cut by 38.5 percent. The IPO closed its opening day at $9.48, UP 18.5 percent from its initial public offering price and, on Friday, Akcea closed at $18.38 – UP 129.8 percent.
No. 3 on the IPO aftermarket performance list was Newater Technology (NEWA). The company priced its IPO of 1.4 million shares at $5 each, DOWN from 1.6 million shares at $4 to $5 each. On a volume basis, the deal’s size was cut by 12.5 percent. The IPO closed its opening day at $8.93, UP 78.6 percent and, on Friday, Newater Technology closed at $9.76 – UP 95.2 percent.
No. 4 on the IPO aftermarket performance list was Calyxt (CLXT). The company priced its IPO of 7 million shares at $8 each, DOWN from 6.1 million shares at $15 to $18 each. On a price-per-share basis, its price had been cut by 51.5 percent. The IPO closed its opening day at $11.25, UP 40.6 percent and, on Friday, Calyxt closed at $14.74 – UP 84.3 percent.
You might note that all the deals priced below range had failed to draw attention at the higher levels. The bankers did what any seller would – cut the price to get the merchandise out the door. In these cases, it worked.
(For more information about these companies, please check the IPO profiles found on IPOScoop.com’s website.)
On to September
The IPO calendar is as clean as the pink sands of Bermuda. That’s normal for this time of year. The staff at IPOScoop.com will take a brief holiday. We will not be publishing for the week of Sept. 4.
We wish everybody a Happy Labor Day holiday!
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.