US IPO Weekly Winners & Losers

Markets are just treading water, a familiar scene for me, not just in the financial world, but also from the poolside as Chairman of USA Water Polo (the Olympic Governing Body). What does this mean for the IPO market?

The IPO market bounced around this week, down -0.6% vs. +1.3% for the S&P 500. Language learning app Duolingo soared +32.8% on a strong beat-and-raise quarter. Meanwhile investors dumped biomed supplier Maravai and thrift store Savers Value Village. Savers' comp growth came up short in its second post-IPO earnings release.

A public company’s most important quarters are the first two after the IPO, while the lock-up is still in effect. They set the tone and establish credibility. No wonder management teams commonly give conservative estimates.

Of course, that often creates an expectation that estimates are conservative. This week, recent tech IPOs Arm, Instacart, and Klaviyo all hit consensus estimates, but not their whisper numbers, and declined as a result.

A quick reminder: If you own an IPO, stop-losses are your friend. And if you like a recent IPO that was richly-valued, its first major pullback can be a good time to add it to your watch list.

Two IPOs raised $200+ million this week, CARGO Therapeutics (Nasdaq: CRGX) and Hamilton Insurance Group (NYSE: HG). CARGO broke issue (-3%), the latest weak trading from a biotech IPO, and Hamilton finished flat. Both IPOs make sense right now, since insurance companies are benefitting from higher rates on fixed income, and biotechs tend to be less market-sensitive.

The rest of November looks quiet for IPOs, regardless of whether we get a US government shutdown next week. Two notable IPOs filed ahead of December listings: Chinese EV developer ZEEKR (NYSE: ZK) and another insurer Fortegra (NYSE: TFG).