The IPO Buzz: Life After Ferrari

The burning question on the side of the IPO mountain reads: “Is there life after Ferrari (RACE)?”  The short answer is “Yes,” but it is not found in this week’s calendar.

That calendar lists one new face at the IPO window and two carryovers from past weeks. But more on this later.

The answer to IPO life after Ferrari might be found in the stock market on Friday, Oct. 23, 2015.

Some believe a 10 percent recovery from the most recent low is what it takes to reverse a correction. If so, that happened on Friday. Consider the following:

  • The Dow Jones Industrial Average closed at 17,646.70, UP 12.6 percent from 15,666.44 on Aug. 25, 2015, its most recent closing low.
  • The S&P 500 closed at 2,075.15, UP 11.1 percent from 1,867.61 on Aug. 25, 2015, its most recent closing low.
  • The NASDAQ Composite Index closed at 5,031.86, UP 11.7 percent from 4,506.49 on Aug. 25, 2015, its most recent closing low.

Of course, past performance is no guarantee of future performance. But time will tell. There is always hope.

Vital Signs

Nevertheless, the IPO calendar needs the wind of a good stock market to sail forth. The IPO market is not a leader; it is a follower. It takes time to build traction.

Past studies show IPOs generally come to life about four to six weeks after the U.S. stock market bottoms out. In the current cycle, that happened on Aug. 25 – nine weeks ago.

In addition, there is another telltale sign that could be pointing to a turnaround. It is the traffic at the U.S. Securities and Exchange Commission’s filing window.

Against the backdrop of a struggling stock market and a lackluster IPO calendar, one would not expect to see a busy SEC filing window. October 2015 has been one of the busiest Octobers since the dot-com era. By Oct. 23, 2015, a total of 31 companies had filed to go public this month. A year ago, a total of 31 companies had filed to go public by Oct. 24, 2014. The previous year, a total of 33 companies had filed to go public by Oct. 23, 2013. October 2013 was the busiest October.

Note: Public records show that issuers spend millions of dollars to go public. This is serious money; it is not a cup of coffee. People expect their IPOs to get on the calendar, get priced and trade in the aftermarket.

Beer, Dates and Money

The next question is, “What looks interesting?” Since the beginning of October, a few names have emerged:

  • Ballast Point Brewing & Spirits (PINT – proposed), a fast- growing  craft brewer and distiller.
  • Match Group (MTCH – proposed), the online dating company that runs, OKCupid and Tinder plus other Internet and mobile dating subscription services.
  • Square (SQ – proposed), the mobile payments company popular with car services and small businesses.

Help for Ailing Hearts

And now for this week: The new name is MyoKardia (MYOK – proposed).

MyoKardia, based in South San Francisco, California, is a clinical stage biopharmaceutical company developing targeted therapies to treat serious and neglected rare cardiovascular diseases. The company has used its precision medicine platform to generate an initial pipeline of four therapeutic programs to treat the two most common forms of heritable cardiomyopathy —hypertrophic cardiomyopathy, or HCM, and dilated cardiomyopathy, or DCM. These diseases include rare and genetically driven forms of congestive heart failure. Founded in 2012, the company has about 54 employees. Bankers expect to offer 4.7 million shares at $15 to $17 each to raise $75 million on Wednesday evening. The shares are expected to trade on The NASDAQ Global Market on Thursday morning, Oct. 29, 2015.

(For more information, please click here: MyoKardia)

At press time, next week’s calendar is clean and green – nothing. But it is early – and anything can happen.

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.