It’s been over a month since our last IPO update, but that’s because it’s been really light in the IPO market. Back then, Juno Therapeutics (NASDAQ: JUNO) was the talk of the town, given its quest to cure cancer. This IPO is still crushing it, up 82% since its IPO in mid-December.
And with Box Inc. (NYSE: BOX) hitting the market today, we’d be remiss if we didn’t update our readers on what’s happening in the IPO market.
Checking out the Renaissance IPO ETF (NYSEArca: IPO), which tracks companies that have completed their IPO within the last two years, the IPO market has been a laggard of late. The IPO ETF has underperformed the S&P 500 by almost five percentage points over the past three months.
With the string of holidays behind us, there appears to be a renewed interest in IPOs. Box is killing it in the market debut and next Friday is another big day for the IPO world, with the much anticipated Shake Shack hitting the market.
The burger chain is expected to price between $14 and $16 a share. With just $5 million in income over the last twelve months, it’s almost guaranteed that Shake Shack will be trading at over 100x earnings when it debuts. In any case, the excitement over the Shake Shack IPO should bode well for the burger industry.
The IPOs from this past month have been from a variety of industries; they include a European company and a small community bank. Here are the top four IPOs from this past month:
IPO Market Update No. 1: Box
At the time of writing this, Box shares are trading 70% above their $14 a share IPO price. Even with a $2.8 billion market cap, it’s trailing twelve-month revenues are under $200 million — putting the tech company trading at 14 times sales. What’s more is that it has lost some $170 million over the last year.
Recall that Box was one of my IPOs to watch for in 2014, but it didn’t quite make it to market last year — opting to delay its IPO due to market volatility. However, that doesn’t mean competition has disappeared. There’s Dropbox in the cloud storage space, but also Amazon.com (NASDAQ: AMZN), Google (NASDAQ: GOOGL) and Microsoft (NASDAQ: MSFT).
In any case, the market appears less concerned with competition and more focused on Box’s growth potential among businesses looking for a secure cloud storage service.
IPO Market Update No. 2: Euronav (NYSE: EURN)
Euronav also started trading today, hitting the market at a $12.25 IPO price. Shares are flat so far. It’s a European crude oil transportation and storage company. Some of its largest customers include Total (NYSE: TOT) and Chevron (NYSE: CVX). It has managed to lose $60 million during the last twelve months.
It’s worth noting that Euronav has been trading on the Euronext for over a decade. Its U.S. IPO raised close to $200 million, which the company plans to use for purchasing more vessels. On the Euronext, shares are up 10% over the last year.
IPO Market Update No. 3: Country Bancorp (NASDAQ: ICBK)
County Bancorp is a small community bank, with a $100 million market cap. It does everything you’d expect a bank to do — deposits, credit cards and secured/unsecured lending. The bank’s stock is essentially flat since its public market debut last Friday. And it trades just above book value.
It’ll start paying a $0.04 a share quarterly dividend starting in March. Based on its current price, that’s pro forma dividend yield of 0.9%.
IPO Market Update No. 4: Patriot National (NYSE: PN)
Patriot National is a $360 million market cap company that hit the market last Friday. Shares are down a couple of percent from its IPO price of $14 a share. The company is a provider of outsourced workers’ compensation solutions; working with insurance carriers to design workers’ comp programs. It makes its money from fees for its services.
However, it’s worth noting that shares trade at a somewhat high price-to-earnings ratio of 33. It also doesn’t plan to pay a dividend. Meanwhile, one of its chief peers, Arthur J Gallagher (NYSE: AJG), trades at a P/E ratio of 22 and pays a 3.2% dividend yield.
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