I kept saying the IPO market would open up. It's finally happening.
There were six IPOs last week (seven if you include a blank check company), tied for the busiest week of the year.
Then, I came in this morning, and six — count 'em, six — IPOs announced terms.
Finally. The floodgates are opening. If all goes as planned, there will be at least seven IPOs next week (there's only one scheduled for this week), making next week the busiest week of the year.
As of now, there should be at least 18 companies going public in April, the busiest month since October of last year, when we had 19.
The offerings are amazingly diverse. Two companies are scheduled to trade on Thursday, April 27th:
- China Rapid Finance, a Chinese peer to peer microlending firm; and
- Floor & Decor, a national flooring retailer.
Five companies are scheduled to trade on Friday, April 28th:
- Emerald Exhibition Exhibits, the largest trade show operator in the U.S.
- Cloudera, a data management platform;
- NCS Multistage, an energy company specializing in well completion services;
- Carvana, online used car sales; and
- Zymeworks, a biopharmaceutical firm.
All will trade at the NYSE with the exception of Zymeworks, which will trade at the NASDAQ.
There's not just more IPOs going public, those that have gone public are performing better. The Renaissance Capital IPO ETF, a basket of the last 60 IPOs is up 10 percent this year, twice the gain of the S&P 500.
April's strong numbers comes off a strong first quarter for IPOs. There were 25 IPOs in the first quarter that raised $10 billion, that is way above the first quarter last year when there were only 8 IPO that raised a measly $700 million.
What's next? There's a few energy companies like Tapstone, and more airlines like low cost carrier Frontier Airlines, and many more Energy companies.
But the big story -- if Cloudera is successful -- may be the long-awaited emergence of unicorns from hiding.
If Cloudera does indeed go public, this would be the fourth tech unicorn of the year (after Snap, Mulesoft, and Okta). That doesn't sound like a lot, but there were only three last year: Twilio, Coupa Software, and Nutanix. We will now have four in just two months.
There are no additional unicorns (companies with valuations in excess of $1 billion) in the pipeline for the moment. Blue Apron still floats out there.
Here's the issue: do unicorns need a higher threshold to go public? Seems to me they do. After all, these companies have held off going public because they can raise money privately and they have such a high valuation there is a real risk that value-conscious investors will not pay the high prices.
Look at Cloudera. It looks like it will go public with a market cap of $2.2 billion, but it was valued at about $4.1 billion almost three years ago.
Yikes. Fast-growing, high losses and very highly valued. That's an issue for any unicorn.
Is the market willing to pay up for that combination?
"Last year, it would not have been a good combination," said Matt Kennedy, who analyzes IPOs at Renaissance Capital. "We'll see if this year is different."