US IPO Weekly Winners & Losers

For the umpteenth time, the US Fed poured cold water on equity markets on Friday. High inflation and a hawkish Fed can keep the IPO market closed indefinitely.

In any case, we do expect some activity in the coming months. A number of IPOs have refreshed their filings, and this week biotech Third Harmonic Bio (Nasdaq: THRD) submitted the largest new filing in three months. We’ll discuss our outlook in more detail this week in our annual Fall Preview report.

Three micro-caps (JZ, PXMD, STBX) and three nano-caps (MOB, JFBR, ONFO) priced IPOs this week. A Chinese education firm (JZ) was the latest low-float pop-and-drop, at one point up +3,140%. From there it fell -88%. Micro-caps now make up about two-thirds of US IPOs this year, up from ~20% in recent years.

For IPO Pro subscribers, we published a write-up on coffee distributor Westrock Coffee (Nasdaq: WEST), which goes public via SPAC merger on Monday. A sign of a more mature SPAC market, it has a large PIPE, over $700 million in revenue, and positive EBITDA.

Another sign of a mature SPAC cycle: IR services heavyweight ICR launched a new SPAC liquidation service. We’ve noted a recent uptick in SPAC liquidations, with the majority expected in 2023.

The Renaissance IPO Index returned -0.8% this week, outperforming the S&P 500’s -4.0% loss. Snowflake shot up +28.4% after a strong revenue beat, now valued at an impressive 35x trailing sales. Buy-now-pay-later firm Affirm fell -20.5% after its earnings release, where losses were wider than expected amid macro headwinds.

US-listed Chinese issuers made up three of the top five winners this week, as regulators in both countries reached a deal to allow Chinese stocks to remain listed in the US. This could open the door to more US IPOs from China, eventually.