The IPO Buzz: Summer Facts and Fiction

May’s IPO market went out with a bang and touched off the conversation that the calendar is coming to life. Next up: June, July and August. Soon “the summer doldrums” are bound to be discussed in various precincts of the financial press. But here’s the good news: The facts do not support this myth about Wall Street.

Let’s go to the IPO data bank and dig out the facts. Starting with the Summer of 2000 and running through the Summer of 2015, 791 IPOs were priced during June, July and August versus 2,929 IPOs that were priced for the entire 16 years running from 2000 through 2015, according to the U.S. Securities and Exchange Commission filings.

The facts show 27 percent of the IPO market’s annual traffic came during “the summer doldrums.” That beats a three-month average of 25 percent of a year’s IPO traffic.

Best Summer Ever

The busiest summer was the Summer of 2005 when 88 of the year’s 236 IPOs were priced. That was 37.3 percent of the 2005 traffic.

The slowest summer was the Summer of 2006 when 41 of the year’s 240 IPOs were priced. That was 17.1 percent of the year’s traffic.

The Summer of 2015 was up there in the history book. In the Summer of 2015, 61 of the year’s 176 IPOs were priced. That was 34.7 percent of the year’s traffic.

Defining Doldrums

Nevertheless, there are a couple of periods during the hot and humid days of summer that do qualify as doldrums in the canyons of Wall Street. The first period occurs around the Fourth of July. Volume traditionally slows down in the days leading up to Independence Day and a few days after the holiday.

The next slowdown comes about six weeks later. By mid-August, the IPO market usually closes down and people take off the last two weeks before Labor Day.

The bottom line is this: The facts show the IPO market is open for business from June through mid-August and traffic is higher in the summer than it is for an average three-month period.

A Merry Month Indeed

Now let’s turn to the present and the merry month of May.

On Thursday, May 26, five IPOs started trading. These deals raised May’s volume to 17 IPOs that raised $3.3 billion. That volume slightly exceeded the combined total of 16 IPOs priced during the first four months of 2016. Worth noting: May’s volume – in dollars raised – was only a tad less than the $3.4 billion raised by companies that went public from January through April.

You have to go back seven months to October 2015 to find a busier month. That calendar generated 20 IPOs that raised $5.8 billion.

That was the past. Now let’s look ahead.

Health Data in the Cloud

This week is shortened by the Memorial Day holiday and that usually slows down traffic. This week is no exception. The calendar lists four offerings expecting to raise $178 million.

Two of the four offerings are carryovers from last week, while one is a small-cap unit offering and the other is Nant Health (NH – proposed).

Nant Health, based in Culver City, California, is a healthcare company providing cloud-based platform solutions that offer an integrated clinical platform to give actionable health information at the point of care for critical illnesses. The company has developed an adaptive learning system, CLINICS, which includes its software, middleware and hardware Systems Infrastructure that, according to Nant Health, “collects, indexes, analyzes and interprets billions of molecular, clinical, operational and financial data points derived from novel and traditional sources, continuously improves decision-making and further optimizes our clinical pathways and decision algorithms over time.”

For the three months ended March 31, 2016, Nant Health reported a net loss of $33.1 million on revenue of $19.5 million versus a net loss of $14 million on revenue of $11.7 million for the same period a year ago. Nant Health reported an accumulated deficit of $324.3 million for the period ended March 31, 2016.

Bankers plan to price 6.5 million shares at $12.50 to $15.50 each on Wednesday evening, June 1, to trade Thursday morning, June 2. The IPO is expected to raise about $91 million.

Looking into the week of June 6, the IPO calendar is clean and green – nothing. Once bankers return from their long Memorial Day weekend, things could start picking up.

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.