On Tuesday, Japanese wholesale retailer Yoshitsu (TKLF) became the latest micro-cap IPO to deliver astonishing returns, closing up 700% on its first day. Despite pricing at the low end of the range at $4, the stock opened with a more than 1,000% gain at about $41, before finishing the day at $32.
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Last year's trend of tiny deals with huge pops has continued into 2022, even as the broader IPO market fell to a 52-week low, as measured by the Renaissance IPO Index.
Since the start of last year, eight IPOs have now popped more than 200% on their first day of trading; each raised less than $40 million, and went public at a market cap below $200 million.
Those initial returns were fleeting: The past seven average a post-pop return of -90% from the first-day close. Even those who bought at the offer price took a bath, with the group returning -38% from the IPO price, on average, and all but one below issue.
*Returns as of 1/18/2022 close. Excludes EZGO and MITQ, which popped over 200% but failed to meet RC's $50mm IPO market cap cutoff.Yoshitsu is based in Japan and primarily sells wholesale in China (77% of FY21 sales), offering Japanese beauty, health, and other products. The company generated $222 million in sales for the year ended March 31, 2021 (+59% y/y), the most recent period disclosed, with a net margin of 2.5%. In an unusual move, Yoshitsu priced its IPO at $4 on Friday, January 7, but began trading on the Nasdaq on January 18.
