Our economics commentator, Michael Baxter looks back on some recent IPO launches and how they have performed.
Recent IPO's, how are they now?
Looking back in hindsight may seem like a pointless pursuit, but then that is how we learn. Today, I look back at recent IPOs (initial public offerings) partly to see if there are any lessons that we can learn, but while I am at it, let’s see if there are any gems lurking among the companies that I list.
For this piece I am mainly looking at UK and US IPOs in 2019. In a couple of cases I have gone back to 2018, but only because these specific IPOs were too big to ignore and in one case I look beyond the US and UK.
It would be very easy to only focus on the successes, and then conclude that IPOs were all very successful. I have indeed included a list of super successful IPOs in the US biotech space, but that aside, I have tried to focus on all major IPOs ‐‐ the ones that were massive successes and ones that so far, look disappointing.
Warren Buffett has famously argued that an IPO is not a good time to invest – that the hype that comes with an IPO can distort the price, and the idea that the best possible moment to buy into a company is when it floats seems implausible. Such advice is usually correct, but not always. The best time to have invested in Google, for example, was at IPO. Furthermore, Mr Buffett questioned the valuation of Google at that time.
On the whole, however, the recent experience backs up what Mr Buffett says.
Of the six UK IPOs I consider, three currently see their share prices exceed the IPO price, three see it less than the IPO price. It is just that two of the three that have seen shares fall, saw spectacular falls – Funding Circle and Aston Martin.
Of the eight US companies I look at, shares in five of the companies are currently less than the IPO price. I think it is quite interesting that not even the much‐hyped Uber and Lyft can match either Aston Martin or Funding Circle for the extreme way shares have fallen in value.
Finally, we see our spectacular US successes in the biotech space. I have not included these companies in the above lists, because they were not what I would call mainstream IPOs, subject to a blaze of publicity.
Of course, the biotech space has seen many failures too, don’t conclude from my list that biotech is all good; the sample is biased because I have cherry picked successes.
But it does go to show there are many opportunities in biotech. For what it’s worth, I expect an awful lot of innovation in this space, as computer models, computer processing power, data, AI, genome sequencing and DNA editing all advances.
Anyway, here is my list:
|UK companies||Date (2019), unless stated otherwise||Change in percent from IPO to today||Type of company|
|Aston Martin||October 2018||-76%||Luxury cars|
|Bicycle Therapeutics||May||-15%||Cancer treatments|
|Diaceutics PLC||March||20%||Diagnostic testing information|
|DWF Group||March||3%||Multinational law firm headquartered|
|Funding Circle||September (2018)||-81%||Peer to peer marketplace|
|Trainline||June||16%||Travel booking engine|
|US Companies||Date (2019) unless stated otherwise||Change in percent from IPO to today||Type of company|
|Dynatrace||July||7%||Software intelligence company|
|Lyft||March||-39%||Taxi bookings/ride sharing|
|April||-11%||Social media and apps|
|Peloton Interactive||September||24%||Exercise bikes connected to computer|
|Slack||June||-46%||Business communications tool|
|Uber||May||-11%||Taxi bookings/ ride sharing|
|Other Territories||Date (2019), unless stated otherwise||Change in percent from IPO to today||Type of company|
|Successes in the US Biotech space||Date (2019), unless stated otherwise||Change in percent from IPO to today||Type of company|
|Applied Therapeutics||May||400%||New Drugs for datal of debilitating diseases|
|Aprea Therapeutics||October||99%||Novel Cancer therapeutics|
|InMode||August||213%||Surgical tools for aesthetic procedures|
|Karuna Therapeutics||June||399%||Treatments for schizophrenia and Alzheimer|
|Nextcure||May||129%||Drugs for Cancer|
|RAPT Therapeutics||November||285%||Oral Medications for Cancer and inflammation|
|Turning Point Therapeutics||April||123%||Biotech oncology|
These views are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees