Looking back at the big initial public offerings of last week and the most in-focus IPOs this week, investors reacted with "hunger" to the debut of an online pet products retailer as they await the direct listing of one of the hottest names in enterprise technology.
LATEST IPOS:
Chewy (CHWY) Chewy opened trading on June 14 at $36. The company had priced 46.5M shares at $22. The deal size was increased from 41.6M shares and priced above the $19.00-$21.00 target range. Morgan Stanley, JPMorgan and Allen & Co. acted as joint book running managers for the offering. Chewy is an online pet-products retailer, which PetSmart acquired in 2017.
In a research note ahead of the company's IPO, MKM Partners analyst Rohit Kulkarni said that while he was not making a recommendation or initiating coverage on the stock, he felt bullish on its growth prospects, driven by its "Amazon-esque" focus on customer experience and secular tailwinds from growth in the broader pet food and pet care industry. Given the about 22% increase in IPO pricing during its two-week IPO roadshow, the analyst believed investors were "indeed hungry" for a pure-play online retailer catering exclusively to consumers' furry friends.
Revolve Group (RVLV) opened on June 7 at $25.16. The company had priced 11.8M shares at $18.00, at the top of $16.00-$18.00 target rage. Morgan Stanley, Credit Suisse and BofA/Merrill acted as joint book running managers for the offering. Revolve is a millennial-focused e-retailer, being powered by influencer marketing tailwinds.
The stock moved higher on June 7 after Andrew Left's Citron Research predicted the shares are going to $50. Citron, best known for its short positions, said via Twitter, "Citron has never commented on an IPO but LONG $RVLV. Profitable at IPO AND growing E-commerce with best unit economics and massive growth ahead. Citron expects to see the stock trade to $50." On Monday, and echoing its Friday tweet, Citron said in a report that Revolve is a "much better business than Farfetch (FTCH) on all facets." Despite Revolve generating an 8% to 9% operating margin while Farfetch is "highly unprofitable," applying Farfetch's 2018 current multiple to Revolve would value the stock between $63 and $64, the firm contended, adding that "there is nothing that should stop Revolve from seeing $50 and beyond."
In a research note ahead of the company's IPO, MKM Partners analyst Roxanne Meyer said that while she was not making a recommendation or initiating coverage, she was bullish on the growth opportunity and positioning of Revolve. The analyst argued that Revolve is poised to gain share in the $564B fashion market, which is estimated to grow at a rapid 13% pace online, according to Euromonitor. The key differentiators of the company's model include 73% of sales from emerging or owned brands, first-mover advantage when it comes to leveraging influencers and social media, tech and business focused founders which are favorably viewed, and track record of profitability, strong capital discipline and leading return on marketing relative to the peer group that "provide investors with confidence in its ability to invest prudently and generate favorable returns."
Crowdstrike (CRWD) opened on June 12 at $63.50. The company had priced 18M shares at $34.00, above the $28.00-$30.00 range. Goldman Sachs, JPMorgan, BofA/Merrill and Barclays acted as joint book running managers for the offering. Crowdstrike is a cybersecurity company focused on endpoint detection and response, a hot area with more than 20 competitors, including FireEye (FEYE), Palo Alto Networks (PANW), Cisco (CSCO) and Microsoft (MSFT).
Ahead of the company's IPO, MKM Partners analyst Rohit Kulkarni said in a research note that while not making a recommendation or initiating coverage, he was bullish on its growth opportunity and its competitive position within the rapidly evolving landscape of security software vendors. The analyst also added that he was "impressed" by the company's SaaS metrics – accelerating ARR growth rate and market-leading dollar retention rate.
Fiverr (FVRR) opened on June 13 at $26. The company had priced 5.26M shares at $21.00, above the $18.00-$21.00 target range. JPMorgan and Citi acted as joint book running managers for the offering. The company serves as an online marketplace connecting businesses with freelancers for services ranging from website design to financial modeling.
In an interview on CNBC following the company's IPO, Fiverr CEO Micha Kaufman said freelancing is still a "very old school business" and sees the opportunity to move freelancing to online being "massive." Kaufman also noted that he expects the proceeds from IPO will be used for working capital and to fuel growth.
GSX Techedu (GSX) opened on June 6 at $12.10. The company had priced 19.8M shares at $10.50, at the midpoint of the $9.50-$11.50 range. Credit Suisse and Deutsche Bank acted as joint book running managers for the offering. GSX Techedu is a technology-driven education company and online K-12 large-class after-school tutoring service provider in China.
PERFORMANCE:
UPCOMING IPOS: Among the upcoming IPOs are Slack (WORK), Personalis (PSNL), Dermavant Sciences (DRMT), Grocery Outlet (GO), and Akero Therapeutics (AKRO).
Slack Technologies is a workplace collaboration software company that is looking to follow in Spotify's (SPOT) footsteps by opting to direct list on the New York Stock Exchange. Slack is expected to be valued at $16B-$17B when the company goes public this week.
Personalis is a provider of contract research and genomic information on various cancers for biopharmaceutical research firms. The company has developed the Accuracy and Content Enhanced technology that improves nucleic acid preparation processes while combining it with patented assay and sequencing methods to provide comprehensive sequencing and ensure high sensitivity for mutations.
Dermavant Sciences is advancing a pipeline of treatment candidates for various skin conditions, with a primary focus on psoriasis and atopic dermatitis. The company's lead candidate, Tapinarof, is a therapeutic aryl hydrocarbon receptor modulating agent topical cream for the treatment of psoriasis and atopic dermatitis, after the Dermavant acquire worldwide rights from GlaxoSmithKline (GSK) in 2018.
Grocery Outlet operates a network of more than 300 independently-run discount grocery stores and plans to raise $275M in its upcoming IPO. The company currently has 323 stores in California, Nevada, Oregon, Pennsylvania and Washington, and aims to open 32 new ones during 2019.
Akero Therapeutics is developing treatment candidates for non-alcoholic fatty liver disease. The company's AKR-001 is an analog of fibroblast growth factor 21, an endogenously-expressed hormone responsible for the regulation of the metabolism of lipids, carbohydrates, and proteins throughout the body. Akero has received approval for its Investigational New Drug application by the FDA in May 2019 and anticipates it will begin screening for potential study participants shortly.
"Opening Day" is The Fly's new recurring series of stories on the latest initial public offerings, their performance, analyst commentary and upcoming IPOs.
Chewy
-1.93 (-5.52%)
Revolve Group
-0.48 (-1.14%)
Crowdstrike
+2.68 (+4.19%)
Changed symbol to MDNT
+0.22 (+1.52%)
Palo Alto Networks
+3.7 (+1.82%)
Cisco
+0.63 (+1.15%)
Microsoft
+0.52 (+0.39%)
Fiverr
+1.95 (+6.18%)
GSK
-0.12 (-0.30%)
Bought by CRM
+ (+0.00%)
Personalis
+ (+0.00%)
Dermavant
+ (+0.00%)
Grocery Outlet
+ (+0.00%)
Akero Therapeutics
+ (+0.00%)
Spotify
+2.97 (+2.05%)
Farfetch
+0.52 (+2.37%)