Wall Street was quiet today, as it always is on Martin Luther King Jr. Day, the federal holiday in honor of the slain U.S. civil rights leader’s birthday. The U.S. stock exchanges were closed today for MLK Day, which is observed on the third Monday in January. No IPOs are set this week. That was the case a year ago as well. So for two years in a row, the IPO Calendar has been blank during this holiday-shortened work week.
A year ago, the U.S. government shutdown was big news. That was politics. The federal government’s closure affected the SEC’s review of prospective deals – and it interrupted the flow of IPOs.
This year, the IPO production line got into gear slowly, hit an icy patch, and skidded to a stop. Last week’s IPO Calendar underscored the frosty climate.
The 2020 IPO market opened last week with four deals priced on Thursday evening, Jan. 16. Each started trading on Friday, Jan. 17. It was not a happy dance through the canyons of lower Manhattan.
Here is what happened. One IPO was priced near the high end of its range. Another IPO was priced at the low end of its range. Two of the four deals were priced below range. By Friday’s close, two were in the winner’s circle, one was a loser, and the other was unchanged.
The average aftermarket performance for the four was a minus 0.7 percent. That’s not a happy tune for Wall Street.
China-based companies accounted for three of the four IPOs priced last week. The other deal was from California. Let’s take a look.
Out of China
I-MAB (IMAB), based in Shanghai, is a clinical-stage biopharmaceutical company committed to the discovery, development and commercialization of novel or highly differentiated biologics to treat cancers, autoimmune disorders and other diseases with significant unmet medical needs. Its leading drug candidate is a treatment for multiple myeloma.
The company priced 7.4 million American Depositary Shares (ADS) at $14 each, near the high end of its $12-to-$15 price range. The IPO opened at $14.75 and closed at $12.50, down 10.7 percent from its initial public offering price.
LIZHI (LIZI), based in Guangzhou, China, says it has transformed the audio industry by creating Lizhi, a mobile app for everyone to create, store, share, discover and enjoy audio (radio programs and podcasts) and interact through it. The company says it is the largest UGC online community in China as of Sept. 30, 2019, according to iResearch. (UGC stands for user-generated content.)
The company priced 4.1 million ADS at $11 each, at the low end of its $11-to-$13 price range. The IPO opened at $11.03 and closed at $11.63, up 5.73 percent from its IPO price.
Phoenix Tree Holdings Ltd. (DNK), based in Beijing, says it is redefining the residential rental market through technology. The company started Danke in 2015 to provide young people with comfortable yet affordable homes. The company had more than 400,000 apartments in 13 cities in China as of Sept. 30, 2019, making it “one of the largest co-living platforms in China with the fastest growth,” according to iResearch, the prospectus says.
The company priced 9.6 million ADS at $13.50 each, below its $14.50-to-$16.50 price range on 10.6 million ADS. The IPO opened at $13.50 and closed at $13.50, unchanged from its IPO price.
Velocity Financial (VEL), based in Westlake Village, California, is a vertically integrated real estate finance company founded in 2004. It originates and manages investor loans for small residential rental properties (1 to 4 units) and small commercial properties.
The company priced 7.25 million shares at $13 each, below its $14-to-$16 price range. The IPO opened at $13.85 and closed at $13.51, up 3.92 percent from its IPO price.
(For more information on these companies, please check the IPO Profiles on IPOScoop.com.)
From the SEC
When the IPO Calendar decides to sleep late, that doesn’t mean the IPO Pipeline has hit the snooze button. The U.S. Securities and Exchange Commission’s filing window has been busy. Let’s take a look back over the first three weeks of the year for 2020 and the four previous years:
- 2020 – 17 IPOs filed to raise $1.43 billion
- 2019 – 14 IPOs filed to raise $1.32 billion
- 2018 – 15 IPOs filed to raise $2.14 billion
- 2017 – 4 IPOs filed to raise $400 million
- 2016 – 17 IPOs filed to raise $1.18 billion
Week of Jan. 27
Only one IPO is scheduled for January’s final week. But that could change when the SEC’s filing window opens again for business on Tuesday morning.
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 opinions.