The IPO Buzz: SPACs and the Dow’s Wild Swings

SPACs are springing up on the IPO Calendar despite some big swings in the Dow Jones Industrial Average in the past 10 trading days. A biotech is the only IPO on tap this week, but SPACs are dotting the IPO skies like seasonal snow flurries.

To recap last week: The blue-chip Dow average scored two daily gains of over a thousand points each and a few daily losses of several hundred points each before closing on Friday, March 6th, at 25,864.78. That marked a gain of 455.42 points from the Dow’s week-ago close at 25,409.36.on Friday, Feb. 28th.

The IPO Calendar had a couple of surprises last week. Three deals got priced – a big trash and recycling company plus two SPACs, otherwise known as special-purpose acquisition companies. The dice fell in favor of the SPACs. Both were winners. (We’ll have more on this in a minute.)

A Boston Biotech

This week’s IPO Calendar features only one deal, which hails from the healthcare sector.

IMARA (IMRA – proposed) is a Boston-based biopharmaceutical company. IMARA is focused on developing and commercializing novel therapeutics to treat patients suffering from rare inherited genetic disorders of hemoglobin, known as hemoglobinopathies. Its lead product candidate is a daily pill to treat sickle cell disease.

Founded in 2016, the company has about 20 employees. It also reported no revenues and an accumulated deficit of $54.8 million, according to the prospectus. Among its principal shareholders are New Enterprise Associates, OrbiMed, Arix Bioscience, Lundbeckfond Invest, Pfizer Ventures, RA Capital and Bay City Capital.

The company plans to offer 4.45 million shares at $16 to $18 each on Wednesday evening, March 11th, to trade on Thursday morning, March 12th. This is a NASDAQ listing.

SPAC Season

SPACs, also known as “blank check” companies, have been emerging on the IPO Calendar in the past few weeks. This trend has coincided with turmoil in the U.S. stock market. The Dow closed at its most recent high at 29,551.43 on Feb. 12th. By the close on Friday, March 6th, the Dow was down 12.5 percent from its recent high. During this period of 17 trading days, bankers priced seven SPACs. The SPACs outperformed the Dow.

On Friday, March 6:

The SPACs Scorecard read: 5 up, 2 down – with an average gain of 1.88 percent.

The Dow’s drop was 12.5 percent from its most recent closing high on Feb. 12th.

The traffic last week at the U.S. Securities and Exchange Commission’s filing window reflects investors’ interest in SPACs. Five of the nine new IPO filings were SPACs. Bankers are aiming to raise a little more than $1 billion from the five SPACs, out of the total $1.33 billion in proposed proceeds from all nine new IPO filings last week.

St. Patty’s Week

This brings us to the week of March 16th, when St. Patrick’s Day is just ahead (on the 17th) and the IPO Calendar is blank so far. But some names could jump quickly onto the calendar when the SEC’s filing window opens again for business on Monday, March 9th.

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.