There was a ton of volatility in the IPO market last week. One
company I've been following rallied 31 percent, another plummeted
11 percent, and yet a third has postponed its big board debut a
We have lots to cover so let's get started.
The chart below shows the returns of the top 5 performing
companies that we've been watching since they went public. Recall
that we began our IPO watch in early July, so companies that went
public prior to July are not included.
Also, remember that the returns I calculate use a stocks first
traded price on the day it goes public rather than its IPO offer
price. I do this because this price more accurately represents the
price at which an average individual investor could purchase
shares. We're not investment banks, so why track the outsized
returns those preferred clients get on their IPO investments,
***MakeMyTrip Limited (Nasdaq: MMYT)
has been the best performing company returning around 58 percent
since it went public on August 11
QLIK Technologies (Nasdaq: QLIK)
is another big winner - the company's stock has surged 52 percent
since it went public in mid July.
Other top winners include
RealPage Inc. (Nasdaq: RP)
China Kanghui Holdings (
Molycorp Inc. (
, all of which have returned 31 percent, 26 percent, and 19
***Investor demand for these companies is driving their share
prices higher. It's also not surpising that some of these
top-performing stocks were among some of the biggest winners last
week - despite a down week in the broader market.
MakeMyTrip posted the largest one week gain jumping 31 percent.
Note that I use the closing dates from Friday August 20
through Friday August 27
According to Dealogics, a data provider for investment banks,
MakeMyTrip has been the best performing IPO since
Athenahealth Inc. (Nasdaq: ATHN)
gained 97 percent back in September 2007.
Why all the fuss? Well, MakeMyTrip is an online travel company
that offers services such as airline tickets and hotels in India
and the US. There have been positive reports from the travel
industry lately and companies like
Priceline.com (Nasdaq: PCLN)
reported second quarter booking increases. Priceline.com reported
an increase of 43% (over the previous year),
Expedia (Nasdaq: EXPE)
reported a 19 percent gain, and
Orbitz Worldwide (
reported 17 percent.
***QLIK Technologies was another big winner last week as its
stock soared 14.5 percent. Two weeks ago, the company released
results for the second quarter of 2010 and reported revenue growth
of 56 percent compared to the second quarter of the previous
***Molycorp Inc. (
, which sells rare earth oxides (those used in the development of
green technologies), rounded off the top three winners. The now
$1.4 billion market cap company jumped over 5 percent last week and
is up 19 percent since going public on July 29.
Of course, every stock can't go up each week - so let's check
out some of last week's losers.
D Medical Industries (Nasdaq: DMED)
posted the biggest loss last week as shares fell 11 percent. The
Israeli based company develops medical technologies, with a primary
focus on solutions for diabetes treatment.
IntraLinks Holdings Inc. (
dropped 6 percent last week on light volume as investor interest
waned in the enterprise software solutions company.
RealD Inc. (
, a licensor of 3D technology, fell 9 percent. The company is down
around 13 percent since its IPO, but I wouldn't be surprised if its
stock moved higher in coming months as fall sets in and more people
look to the movie theatres for winter entertainment. The buzz
around 3D films has certainly waned since this spring, but the
company has relatively strong fundamentals and is still in an
industry that's growing tremendously fast.
This company highlights some of the risks to those of us who can
only invest in IPOs once the stocks hit the major exchanges. A good
article from Tuesday
discusses some of the pro's and con's of investing in RealD -
noting in particular that the drive to go public may have been
largely to provide a cash out opportunity for insiders at a time
when 3D was all the rage.
That said, there are now five analysts covering the stock, with
a mean price target of $23.50. The stock is trading at $16.71 as of
yesterday's close. That's 41 percent gain if the stock hits that
mean price target.
***There's one company scheduled to go public this week, but I'd
be cautious about this IPO.
, which develops medical equipment and software, has been trying to
go public since July. It originally filed to offer 2.5 million
shares at a price range of $13 to $15 a share then lowered that
price range to $9 to $11 a share at the end of July.
The company then postponed the deal and filed again in early
August, expecting to raise $18.5 million by offering 3.7 million
shares at $5 a share. With relatively poor market conditions I'd be
surprised to see this company go public. If demand isn't there, why
We know why some companies go public: to pad the bank accounts
of the company's founders and major private shareholders. The
rescheduling and changes to this offering reeks of desperation, a
bit. You have to wonder if it's because the current ownership is
desperate for new investment capital, or just desperate for
We'll see what happens, it will be an interesting one to watch
if it does IPO - especially since the projected proceeds have
fallen by nearly 50 percent (from $35 million with 2.5 million
shares at $14, to $18.5 million with 3.7 million shares at $5).
***That's it for this week's IPO update. There is still a lot of
action in this sector, and those of you who have been reading this
report each week should be starting to recognize certain trends in
companies that IPO.
Among those, notice how companies tend to go public when there
is a lot of positive media attention in their particular sector?
That shouldn't come as a surprise - the goal of an IPO is to raise
money, so companies do it when demand is high. But that raises the
likelihood of investors paying a premium, so be careful out
To help you learn more about the exciting arena of IPO
investing, I recently put together a free special report:
Do's and Don'ts of IPO Investing
for the PDF of this free special report.
If you've been active in IPO investing, let me know. My address