The IPO Buzz: One Deal in a Short Holiday Week

There are two unusual things shaping this week’s IPO market.  When the sun came up today, Wall Street was closed for Martin Luther King Jr. Day, the national holiday celebrating the birthday and the legacy of the slain civil rights leader. He would have turned 90 on Jan. 15th. When the U.S. stock market closes on Friday, we’ll have an IPO to add to a short list for January. It will be the second deal of the year.

Historically speaking, January averages about 9 IPOs, according to U.S. Securities and Exchange Commission data for the past 10 years. But traffic has slowed this year. And there’s a trio of reasons why: 1.) The longest U.S. government shutdown in history – today marks Day 31 – has put 800,000 people out of work and some are with the SEC. That can make for slow times in the Land of IPOs. 2.) Next – The stock market has been stabilizing after December’s sharp drop of 9.5 percent for the NASDAQ Composite Index. The NASDAQ closed Monday, Dec. 31, 2018, at 6,635.28, DOWN from 7,330.54 on Nov. 30. On Friday, Jan. 18, 2019, the NASDAQ closed at 7,157.23 – up 7.9 percent from the end of 2018. It takes a little time for the wounds to heal from a recent sell-off. 3.) And then there’s the seasonal factor to take into account. The IPO market traditionally takes a break from mid-December through mid-January. It takes time to get the IPO wheels back on track.

This year’s first IPO was MMTEC (MTC). Headquartered in Beijing, the company provides Internet-based technology services and solutions to Chinese-speaking hedge funds, mutual funds, registered investment advisors, proprietary trading firms and brokerage firms engaged in global securities transactions and settlements. MMTEC priced 1.8 million shares at $4 each on Wednesday, Dec. 26, 2018. A week later, on Tuesday, Jan. 8, 2019, the IPO opened at $4.50 and closed its first day of trading on NASDAQ at $5.94 – up 48.5 percent in its debut.

Bringing Power to the People

Let’s take a look at this week’s traffic.

Thursday pricing for Friday trading

This week bankers plan to price 22.2 million Class A shares of New Fortress Energy (NFE proposed) at $17 to $19 each on Thursday evening, Jan. 24th. This will be the first IPO priced in 2019, although MMTEC (see above) was the first IPO to start trading this year. The New Fortress IPO is expected to start trading on NASDAQ on Friday morning, Jan. 25th. If you add in about 147.1 million Class B shares, that would give the company a market capitalization of about $3.05 billion.

New Fortress, based in New York City, is an integrated gas-to-power company seeking to use “stranded” natural gas to satisfy the world’s large and growing power needs. For the 12-month period ending Sept. 30, 2018, New Fortress reported a net loss of $55.7 million on revenue of $106.2 million. In addition, it reported an accumulated deficit of $123.7 million.

The offering lists four joint-lead managers and four co-managers. The names can be found on the cover of its prospectus.

January’s Final Week

For the week of Jan. 28th, the IPO Calendar has one blank check offering. The deal is scheduled to be priced Jan. 31st and to trade Feb. 1st. This one falls into next month’s traffic.

Of course, anything can happen when the SEC’s filing window opens for business again on Tuesday morning.

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 opinion.