The IPO Buzz: Reality Check

The IPO market just got a reality check. The outlook is much more cautious after Monday’s hedge fund bombshell and last week’s dismay over some hot IPOs, notably DigitalOcean (DOCN), sailing into rocky waters and opening lower.  On Friday, the market regained some equilibrium, with two biotech IPOs scoring moonshots on their first day of trading. But the mood has shifted now to more realistic expectations, the IPO pros say.

The fallout from losses at hedge fund Archegos Capital Management – splashed on the front page of The Wall Street Journal – is “going to be  a very big problem” this week,  and as a result, bankers will need to take extra care when pricing their deals, the top IPO traders say.

“You’re going to hear a lot more about valuation now,” a seasoned IPO professional told IPOScoop.

Seven deals – six IPOs and one uplift to the NASDAQ – are on the IPO Calendar during this four-day week, which includes Passover and leads up to Easter. The U.S. stock market will be closed on April 2nd for Good Friday.

Among the IPOs attracting early attention are Achilles Therapeutics (ACHL proposed), a London-based cancer biotech; Compass (COMP proposed), an online real estate brokerage, and  Coursera (COUR proposed), a digital learning company.

Frontier Group Holdings (ULCC proposed), the parent of Frontier Airlines, a discount airline based in Denver, is generating some interest after  the successful IPO of Sun  Country Airline Holdings, Inc. (SNCY) on March 17th. Discount airlines are seen as “a re-opening play” as the U.S. economy recovers from the pandemic lockdown. But the IPO pros say that investors should pay close attention to valuation here because these two discount airlines are not comparable.  Sun Country has a cargo freight business, in addition to its charter passenger business, while Frontier is a discount commercial airline.

March: It’s a Wrap

Three dealstwo traditional IPOs and one uplift to the NASDAQ – are scheduled for pricing on Tuesday night. These initial public offerings are set to make their debuts on Wednesday, which will wrap up the IPO market’s version of March madness.

Tuesday night pricing for Wednesday trading:

Achilles Therapeutics plc  (ACHL proposed) is a clinical biopharmaceutical company developing precision T cell therapies to treat solid tumors, including non-small cell lung cancer and melanoma. The company’s leading product candidate is designed to target clonal neoantigens that are present in cancer cells and absent from healthy tissue.

This IPO is attracting strong interest from the IPO players in the biotech sector.  The deal consists of only 9.8 million shares at $17 to $19; estimated proceeds are $175.5 million, based on mid-point pricing.

JPMorgan, BofA Securities, Piper Sandler, Chardan, Oppenheimer & Co. and Kempen & Co. are the joint book-runners. This is a NASDAQ  listing.

Note: Like many biotechs, Achilles Therapeutics does not have revenue. The company had a net loss of $33 million over the last 12 months, the prospectus says.

Coursera, Inc. (COUR proposed) is a digital learning company based in Mountain View, California. Coursera’s revenues soared during the pandemic as most undergrad and master’s degree programs  went online. Individuals signed up for courses to learn new skills to help them hunt for work after losing their jobs during the COVID-19 downturn. Businesses and government entities also subscribe to Coursera to enable them to offer training to their employees and citizens.

The Coursera deal consists of 15.7 million shares at $30 to $33 each to raise $495.5 million, if priced at the mid-point. Anchor orders represent up to 25 percent of the IPO, the prospectus says.

Morgan Stanley, Goldman Sachs, Citigroup and UBS investment Bank are the joint book-runners. This is a New York Stock  Exchange (NYSE) listing.

Karooooo Ltd. (Cartrack) (KARO proposed) is a vehicle tracking company’s  uplift deal consisting of 4 million shares to be listed on the NASDAQ. The stock of its subsidiary, Cartrack, already trades on the Johannesburg Stock Exchange (JSE) under the symbol “CTK.”  The stock recently closed at $47.52 on the JSE.

After the IPO, Karooooo will take over the business of Cartrack, a proprietary cloud SaaS vehicle-monitoring platform with clients in 23 countries, and apply to delist Cartrack’s shares from the JSE. The company earned a profit of US$28 million on US$125.8 million in revenue for the fiscal year that ended Feb. 29, 2020, the prospectus says. Cartrack was founded in 2001 in South Africa with an initial focus on stolen vehicle recovery services.  Karooooo, based in Singapore, aims to expand the company’s business in Asia. Cartrack’s main business office is in South Africa.

Morgan Stanley, BofA Securities and William Blair are the joint book-runners.

Looking At April

Four IPOs are expected to get priced Wednesday night and start trading on Thursday to usher in the month of April. Let’s take a look.

Wednesday night pricing for Thursday trading:

Compass, Inc. (COMP proposed) is an online real estate brokerage that some are calling “the new Zillow.” Compass is based in New York and backed by SoftBank. Compass booked about $3.7 billion in revenue and a net loss of about $270 million for the last 12 months, according to the prospectus.

Robert Reffkin, the founder and CEO of Compass, is a former Goldman Sachs COO.

Goldman Sachs, Morgan Stanley, Barclays, Deutsche Bank Securities and UBS Investment Bank are the joint book-runners. This is an NYSE listing.

Frontier Group Holdings, Inc. (ULCC proposed) is an ultra-discount commercial airline based in Denver with a focus on Orlando and Las Vegas. This deal isn’t Frontier’s first IPO rodeo. The company filed to go public in 2017, but scrapped that plan in July 2020 after the COVID-19 pandemic crippled the airline industry. Frontier is owned by Indigo Partners, a private equity firm. For the last 12 months, Frontier had a loss of $230 million on $1.25 billion in revenue. At Dec. 31, 2020, Frontier had $348 million in debt.

Frontier’s IPO consists of 30 million shares at $19 to $21 each to raise $600 million, if priced at the mid-point.  Stockholders are selling half of the shares in this deal.

Citigroup, Barclays, Deutsche Bank Securities, Morgan Stanley, Evercore ISI, BofA Securities, JPMorgan, Nomura and UBS Investment Bank are the joint book-runners. This is a NASDAQ listing.

Intermedia Cloud Communications, Inc. (INTM proposed) offers a proprietary cloud platform for business email and workplace collaboration. A Chicago-based private equity firm, Madison Dearborn, will still own 80 percent of the company after the IPO.  For the last 12 months, Intermedia Cloud Communications had a net loss of $22 million on revenue of $256 million. The company is based in Sunnyvale, California.

This is an IPO of 12.2 million shares at $23 to $26 each to raise $294 million, if priced at the mid-point.

Morgan Stanley and JPMorgan are the joint book-runners. This is a NASDAQ listing.

Kaltura, Inc. (KLTR proposed) is a video cloud company that caters to businesses and organizations through its video portal, town halls, virtual events and webinar offerings. Kaltura , based in New York, counts 25 of the Fortune 100 companies among its clients. For the last 12 months, Kaltura had a net loss of $58.8 million on $120.4 million in revenue, the prospectus says.

This is an IPO of 23.5 million shares at $14 to $16 each to raise $352.5 million, if priced at the mid-point.

Goldman Sachs, BofA Securities, Wells Fargo Securities and Deutsche Bank Securities are the joint book-runners. This is a NASDAQ listing.

First Trading Week of April

No IPOs have been scheduled yet for the week of April 5th, which will be the first full work week of April. That blank slate could start to fill up quickly, though, as more companies update their SEC filings.

Stay tuned.

For an overview of the IPOs scheduled for pricing so far this week, please click on the link to IPO Calendar: IPO Calendar | IPOScoop

(For more information about these companies, please click the hyperlinks, which will take you to the IPO profiles on


(Never trade on proposed symbols. You might wind up owning something on the OTC Bulletin Board.)

Disclosure: Nobody on the staff has a position in any stocks mentioned above, nor do they trade or invest in IPOs. The 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 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.