January’s IPO market ended with fireworks. The final Friday of the month produced two opening-day moonshots. February opens with a dozen IPOs, mostly from the health-care sector – a sector that has become selective. Friday provided an example.
A moonshot, friends, is easy to recognize: By the closing bell on its first day of trading, the stock has doubled its IPO price – UP 100 percent – or more.
One of the moonshots last week attracted media coverage almost on a par with a visit from Prince William and the Duchess of Cambridge. The other deal, oddly enough, was mostly ignored.
An Explosive Appetite
Shake Shack (SHAK), the New York City-based restaurant chain, rocked and rolled. Wall Street’s appetite for the IPO turned out to be as intense as the craving that makes Shake Shack fans line up around the block for a burger or a concrete (a thick shake).
To re-cap: On Jan. 20, Shake Shack set terms to offer 5 million shares at $14 to $16 each. On Jan. 28, Shake Shack increased its offering terms to 5 million shares at $17 to $19 each. On Jan. 29, the IPO was priced at 5 million shares at $21 each. On Jan. 30, Shake Shack opened at $46.55, sold as high as $52.50, and closed at $45.90 – UP 118.6 percent from its IPO price.
In short: Shake Shack raised 40 percent more than it originally intended, and its stock more than doubled its IPO price in its debut on the New York Stock Exchange.
A Spark in the Dark
Spark Therapeutics (ONCE), a Philadelphia-based gene therapy company engaged in developing life-altering gene therapy treatments for patients affected by rare diseases that cause blindness and debilitating diseases such as hemophilia B. It also scored a moonshot.
To re-cap: On Jan. 20, Spark set terms to offer 5.5 million shares at $15 to $17 each. On Jan. 28, Spark increased its offering terms to 6.5 million shares at $19 to $21 each. On Jan. 29, the IPO was priced at 7 million shares at $23 each. On Jan. 30, Spark opened at $45.10, sold as high as $51.90, and closed at $50, UP 117.4 percent from its initial public offering price.
In short: Spark raised 83 percent more than it originally intended, and its stock more than doubled its IPO price in its first day of trading on the Nasdaq.
All in all, 10 IPOs were priced last week. Seven finished their opening day as winners. The other three were losers. The average opening-day gain for all 10 was 36.1 percent.
On the dark side of midnight, aside from Spark, the health-care sector did poorly. Excluding Spark, seven health-care IPOs were priced. Four finished their opening day as winners, while three wound up as losers. The average opening-day gain for those seven was 3.1 percent.
That brings us to this week and its calendar of 12 IPOs. Bankers expect to raise over $1.8 billion, but 10 of the 12 deals are from the health-care sector. At press time, there does not appear to be another Spark Therapeutics in the crowd. Nevertheless, this is Wall Street, where anything can happen.
Looking into the week of Feb. 9, the calendar has three IPOs expecting to raise over $700 million. None of those deals is from the health-care sector. But more names could pop onto the IPO launching pad by the time that Monday, Feb. 9, rolls around.
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.