US IPO Weekly Winners & Losers

Two quick takeaways: Losses still matter, and not every AI company is in high demand.

This week’s IPO Tempus AI (Nasdaq: TEM) priced at the high end, but it nearly broke issue, and closed a modest +8.8% from IPO. The deal was a down-round from 2020, though its sales multiple still came in above most of the peer group.

Tempus envisions a world where its data and AI tools are used to both diagnose and treat patients, but unlike certain AI plays, the explosive revenue growth just isn’t there yet. Investors fell back on the numbers, and saw a roughly 25% grower with a -25% EBITDA margin. So far the quarter’s three largest VC-backed IPOs have been met with a shrug.

It won't halt deal flow, and remember that Q1 IPOs Reddit and Astera Labs have held onto their 50%+ gains. But it’s no surprise that we’re not seeing tech unicorns rush to go public.

Australia-listed Telix Pharmaceuticals withdrew its US IPO, citing market conditions and valuation discounts. Forget about the S&P being at all-time highs, Telix itself is up +65% on the ASX this year. Foreign issuers can often expect more liquidity and a higher valuation in US markets. But first IPO buyers in the US expect a discount - steeper than other listing venues - which can cause sticker shock.

There’s nothing major on the IPO calendar, with US markets closed on Wednesday for Juneteenth. However, we do see a few good candidates ready to kick off roadshows. Also, companies should begin filing next week to tee up IPO launches after the July 4 holiday. The largest IPO of the year may be among them: news hit that cold-stage REIT Lineage Logistics is planning to raise over $3 billion next month.

Inflation came in slightly lower than expected, and the Fed is indicating one rate cut this year. The IPO market finished the week up +0.4%, while the S&P 500 returned +1.6%. The week’s top IPO performer mobile chipmaker Arm gained +15.6%, boosted by its inclusion in the popular Nasdaq-100 Index (note: it’s been in the Renaissance IPO Index since December). Assisted-driving company Mobileye was the week’s loser, and backpedaled -10.9%.