US IPO Weekly Winners & Losers

Over the past year, the most common question that readers asked was, “How do I buy pre-IPO companies?” My response always started off with “Be careful what you wish for.”

The IPO market looks bad, but private markets are worse. In prior downturns, startups quietly grew into lofty valuations, but now it’s a matter of survival. For VCs and their limited partners, the liquidity premium is once again top-of-mind: You don’t know what you got ‘til it’s gone.

The IPO market plunged -9.8% this week, well below the S&P 500’s -0.2% decline. As a point of reference, the IPO Index is now at about the same level as February 2020, before the COVID-19 crash and rebound. The market is searching for a bottom, just as the US Fed is searching for the interest rate that will subdue inflation.

In this environment, IPO investors need to see stable, profitable companies priced at a significant margin of safety. With that in mind, it's worth paying attention to new offerings. Bausch + Lomb (NYSE: BLCO) completed the year’s second-largest IPO after pricing below the range, and then delivered a solid 11% gain. Rare disease biotech PepGen (Nasdaq: PEPG) also priced down and traded up.

In the week ahead, fracking company ProFrac Holding (Nasdaq: PFHC) aims to raise $360 million in its Nasdaq IPO. Energy is one of the few bright spots of the 2022 IPO market.

ZIM Integrated Shipping was the IPO Index’s winner, up +18.9%. Lyft crashed -37.1% after earnings, where the unprofitable company revealed it would pay more to retain drivers amid rising gas prices.