This week’s IPO Calendar has four deals that add up to $1.42 billion – and two are surrounded by investors’ interest. One is Chewy (CHWY proposed) and CrowdStrike Holdings (CRWD proposed) is the other. Each has its own story.
Chewy was formed to offer the convenience of online shopping for pet products – everything from pet food, cat litter and pet-safe toys to specialty items like an outdoor heated kitty house (yes, a heated kitty house, NOT a heated cat house, which might be another online retail category altogether) or a deluxe guinea pig cage (yes, that’s a thing!).
CrowdStrike is a unicorn that provides cybersecurity for the cloud era. (A unicorn is a private company with a market valuation of $1 billion or more.)
Meanwhile, Peloton, the unicorn specializing in high-priced digital exercise bikes, said last week that it had filed confidential IPO documents with the U.S. Securities and Exchange Commission. (But that’s a story for another time.)
Chewy on This
On the positive side: Chewy reported net sales for the 13-week period ending May 5, 2019, of $1.1 billion, up 44.2 percent from $763.5 million for the same period a year ago.
On the downside: Chewy reported a loss for that 13-week period of $29.6 million, although that was narrower than the year-ago period’s loss of $59.8 million. The company reported a stockholders’ accumulated deficit of $1.6 billion. See Page 22 of Chewy’s prospectus: “As a result, our losses may be larger than anticipated and we may never achieve profitability.”
Chewy plans to offer 41.6 million shares at $17 to $19 each. Note: The company, based in Dania Beach, Florida, will offer 5.6 million shares and its insider shareholder, PetSmart, will offer 36 million shares. PetSmart will control about 70 percent of the outstanding stock and about 77 percent of the voting power of both classes of stock in Chewy after the IPO, according to the prospectus.
CrowdStrike and a Price Hike
CrowdStrike produced the biggest news of the four IPOs in this week’s IPO pipeline. It came on Thursday, June 6, when the price range was increased to $28 to $30 from $19 to $23, a jump of 38.1 percent in the price range on the same number of shares of 18 million. That’s usually a sign of high investor demand.
Consider this: The 2019 IPO Calendar has priced 61 deals, according to SEC filings. Of that number, 19 IPOs were priced above their original filing terms.
- The average first-day gain for the 19 was up 41.4 percent.
- The average first-day gain for all 61 was up 23.2 percent.
- The average first-day gain for the 42 priced below or within filing range was up 11.3 percent.
That gives you some insight into the rationale behind an old Wall Street saying: “Increase an IPO’s terms, double my order.”
Four Deals in June’s Second Week
Now let’s take a look at the four deals on this week’s IPO Calendar, organized by pricing and trading dates.
Tuesday evening pricing to trade Wednesday morning:
CrowdStrike Holdings, based in Sunnyvale, California, provides endpoint security, threat intelligence and incident response services to customers in more than 170 countries. The company has been involved in countermeasure efforts to several high-profile cyber-attacks. The company says it is reinventing security for the cloud era.
Mohawk Group Holdings (MWK proposed), based in New York City, uses artificial intelligence (AI) and machine learning technology for the identification, incubation and autonomous marketing of brands in the consumer-packaged goods sector in four product categories: home and kitchen appliances, kitchenware, beauty products and finally, air conditioners and home dehumidifiers.
Wednesday evening pricing to trade Thursday morning:
Fiverr International (FVRR proposed), based in Tel Aviv, is an online marketplace catering to the Gig Economy. It allows companies and individuals to hire and manage freelancers providing such services as web design, writing and editing, voice over, translation and logo design.
Thursday evening pricing to trade Friday morning:
Chewy (for profile, see above) is the only deal on tap to make its debut on Friday morning.
(For more information about these companies and others on the IPO Calendar, please check the profiles found on IPOScoop.com’s website.)
June’s Third Week
For the week of June 17, 2019, the IPO Calendar has three deals scheduled. Two are IPOs and the other is a “Direct Public Offering.” It is Slack Technologies (WORK proposed), but more on this next week.
Nevertheless, anything can happen when the SEC’s filing window opens again for business on Monday 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.