IPO investors hoped that Oatly Group AB (OTLY), the Swedish oatmilk brand backed by Oprah Winfrey, would make the right kind of splash today when it started trading on NASDAQ. And lo and behold, it did. The vegan-friendly company’s stock opened at $22.12 – or 30 percent above its IPO price. Oatly priced its IPO on Wednesday night (May 19, 2021) at $17 – the top of its $15-to-$17 range – on 84.38 million American Depositary Shares (ADS) to raise about $1.43 billion.
Squarespace, Inc. (SQSP) probably wishes it could turn back time. (Thank you, Cher.) The website hosting platform’s debut on Wednesday in its NYSE direct listing was a disappointment, to put it mildly. Squarespace’s 40.4 million shares of Class A common stock started trading at $48 – or 4 percent below the $50 reference price assigned late Tuesday by the New York Stock Exchange. Squarespace closed its first day of public trading at $43.65 – 12.7 percent below the reference price.
Most of the IPO market’s talk over the past week was focused on Oatly, a traditional IPO, and Squarespace, which was a direct listing – and NOT an IPO. High hopes were tempered by the U.S. stock market’s three-day slide on concerns about inflation.
Meanwhile, the IPO of Procore Technologies (PCOR) quietly picked up steam. Procore, the only other IPO on this week’s calendar, priced its initial public offering on Wednesday night (May 19) at $67 – or $2 above the top of its $60-to-$65 price range on 9.47 million shares. The construction management software company’s stock started trading today (Thursday, May 20) at $84 on the New York Stock Exchange. Procore’s opening pop was 25.4 percent above its IPO price.
Both Oatly and Procore began trading with some warm tailwinds from the U.S. stock market. Stocks bounced back today. The Dow Jones Industrial Average shot up 300 points after Labor Department data showed that U.S. initial weekly jobless claims had dropped to a pandemic low, The Wall Street Journal reported.
Oatly shares ended their first day of trading at $20.20 – up 18.82 percent from the IPO price of $17. Procore’s stock closed its first day of trading at $88.00 – up 31.34 percent from the IPO price of $67. Thursday’s closing bell wrapped up a good day for the IPO market, though many investors were dismayed by the extremely tight allocations of Oatly and Procore shares.
The O Factor
When Oprah Winfrey loves a product, that means “ka-ching!” for the manufacturer and its retail partners. (Think UGG boots and Nordstrom.) What could be better than that? If Oprah invests in your company, that could spell success on Wall Street. In Oatly’s case, it did.
Oatly’s principal stockholders include a Blackstone fund that attracted an A-list of celebrity investors, namely Oprah Winfrey, actress Natalie Portman, rap mogul Jay –Z’s label, Roc Nation, and Howard Schultz, the ex-CEO of Starbucks. That Blackstone fund owns 6.7 percent of Oatly.
“I love it that Oprah is involved. The woman moves product!” a savvy IPO investor told IPOScoop.
Another positive factor: Oatly’s debt load is moderate. The company plans to use $199.1 million – about 14 percent of the IPO’s proceeds – to pay off debt.
Impressive revenue growth at Oatly gave the IPO some oomph. In 2020, Oatly booked revenue of about $421.35 million, up 106.5 percent from $204 million in 2019.
But some investors were concerned that Oatly hasn’t made a dime yet in profit. The company’s net loss for 2020 was $60.36 million, compared with a 2019 net loss of $35.6 million.
All week long, the IPO market’s conversation centered on: “I hope they price it right.”
Morgan Stanley, J.P. Morgan, Credit Suisse, Barclays, Jefferies, BNP Paribas, BofA Securities, Piper Sandler and RBC Capital Markets were the joint book-runners for the Oatly IPO.
May’s Last Hurrah
Three IPOs and one direct listing are on tap for the final week of May. More names are likely to land on the IPO Calendar as the filings continue to flow in at the U.S. Securities and Exchange Commission’s window.
(Editor’s Note: This column will be updated later.)
(For more information, please see the IPO Calendar. You can click the hyperlinks on company names on the IPO Calendar and those links will take you to the IPO profiles on IPOScoop.com.)
(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.