Category Archives: IPOs

6 Red Hot Recent IPO Stocks You Should Be Following

ipo investing
Source: Shutterstock

By now, it’s fairly common knowledge among financial market observers that the 2019 IPO stocks will be big, headlined by a slew of tech unicorns that are finally ready to hit the public markets. Names in this group include Uber, which will likely debut at a $100 billion-plus valuation, and Airbnb, which will likely command a $30 billion-plus valuation. There’s also Palantir with a rumored $30 billion-plus valuation, Slack with a $10 billion-plus valuation, and WeWork with a potential $40 billion-plus valuation.

But, the first big player in this group to IPO in 2019 was Lyft (NYSE:LYFT), and the results were far from spectacular. Lyft popped on its first day of trading, but it has been nothing but down and out since then. As of this writing, LYFT stock actually trades more than 15% below its IPO price.

The ostensible failure of the Lyft IPO has some fearful about upcoming IPOs. But, the failure of the Lyft IPO is getting too much press, and investors shouldn’t read much into it. While the Lyft IPO did ostensibly fail, there have been a ton of other IPO stocks in late 2018 and early 2019 which have been huge successes, and which imply that future IPOs in 2019 will do just fine.

Which IPO stocks fall into this category of big winners so far on Wall Street? Let’s take a deeper look at 6 red hot IPO stocks that all investors should be watching.

Zoom (ZM)

Zoom Is A Great Company, But Post-IPO Pop Valuation Looks Full

Gain From IPO Price: 100%

At the top of this list is a freshly public tech company which Wall Street has fallen in love with in just a few days.

Zoom (NYSE:ZM) is a video conferencing company which priced its IPO at $36 per share, opened up 80% above that IPO price, and has continued to soar ever since en route to a 100%-plus gain from that $36 IPO price. Why the huge demand for Zoom stock? The hyper-growth tech company checks off every box growth investors are looking for. It’s growing revenues at 100%-plus rate, with a small revenue base in a secular growth and very large video conferencing market. Gross margins are sky high around 80%, while opex rates are surprisingly low for a small company, and Zoom is actually profitable already.

All in all, you have a hyper-growth video conferencing company that’s already profitable. That has investors salivating.

But, the valuation on ZM stock is pretty rich here and now, and the stock has come very far, very fast. As such, caution is warranted here, especially considering that the video conferencing market isn’t light on competitors.

Red Hot IPO Stocks: Pinterest (PINS)

Source: Shutterstock

Gain From IPO Price: 40%

Second up is a social media company with a lot reach and a ton of potential to monetize that wide reach.

Unlike digital ad IPO stocks before it, the Pinterest (NYSE:PINS) IPO has been a huge success thus far. After pricing the IPO at $19 per share, PINS stock has rallied in a big way ever since, and is now up 40% from that IPO price. The rationale behind the rally is simple. This is a company which has a ton of users (265 million monthly active users), and is monetizing those users at a low rate (ARPU of just over a $1 last quarter), so the runway for robust revenue growth through ARPU expansion is promising. Plus, margins are healthy, the international user base is growing rapidly and the valuation is reasonable.

All together, then, PINS stock has been a big winner because the fundamentals are healthy, the upside potential is good, and the valuation is cheap. So long as those three things remain true, PINS stock will stay in its IPO honeymoon phase.

Red Hot IPO Stocks: YETI (YETI)

Source: Yeti

Gain From IPO Price: 100%

Third we have an outdoors consumer product company that didn’t have a huge IPO pop, but has been a steady winner in its short life as public company.

Meet YETI (NYSE:YETI). YETI is an outdoors consumer products brand that specializes in coolers and drinkware. YETI went public at $18 per share in late 2018 without much fanfare. The stock actually traded down on its first day on Wall Street. But, YETI stock has doubled ever since as the company has reported back-to-back strong earnings reports which ultimately underscore that this company has healthy growth drivers, in a healthy market, with a healthy margin profile.

In other words, YETI is a healthy company. Under $20, YETI stock wasn’t priced for healthy. That’s why the stock rallied. Above $30, the IPO stock is priced for healthy. But, not entirely. As such, so long as the numbers remain good (which they should for the foreseeable future), then YETI stock should remain on an uptrend until valuation becomes an issue. That won’t happen until around $40.

IPO Stocks: Jumia (JUMIA)

Fundamentally speaking, there's not a lot to love about Overstock stock

Source: Shutterstock

Gain From IPO Price: 140%

Maybe the most interesting stock on this list is Jumia (NYSE:JMIA).

Long story short, Jumia is Africa’s e-commerce juggernaut, and that means this company is oozing with long-term growth potential. Africa is the last great frontier of the tech revolution. Internet penetration rates on every continent outside of Africa measure north of 50%, and ex Asia, they measure north of 60%. But, in Africa, the internet penetration rate is roughly 36%. That number won’t stay low forever. Over the next several years, thanks to a combination of factors such as urbanization, expansion of the middle class, and heavy technology infrastructure investments, Africa’s internet penetration rate is expected to surge higher, and that surge will spark enormous growth in Africa’s internet sectors.

One of those sectors is e-commerce. Less than 1% of all retail sales in Africa were conducted online in 2018. As internet penetration rates rise, online retail’s penetration will likewise rise, and that will create a huge growth opportunity for players in the market. The largest player in the African e-commerce market today? Jumia, which has 4 million active consumers and a gross merchandise value near $1 billion.

If Jumia can maintain its market leadership position as the African e-commerce market dramatically expands over the next decade, then JMIA stock is a multi-bagger in the making. But, there’s a lot of risks regarding execution and valuation, so this IPO stock isn’t for the faint of heart. Best way to look at Jumia? A high-risk, high-reward play on the potentially enormous African e-commerce market.

Tencent Music (TME)

Gain From IPO Price: 35%

One of the more interesting recent IPO stocks is the company which many people are calling the Spotify (NYSE:SPOT) of China.

Tencent Music (NYSE:TME) is the premiere music streaming platform in China. China is a huge market with a rapidly expanding digital economy. As such, the upside potential for Tencent Music to grow with the rapidly expanding Chinese digital economy is enormous. But, there are a few problems here. Namely, there’s a ton of competition, the company gets most of its revenue from virtual gifts, there’s only 25 million paying subs, and the valuation is huge.

Thus, TME stock is a high-risk, high-reward play on the music streaming market in China. If consumers in that market start paying up for music services, then TME stock will explode higher. If not, TME stock could be stuck in neutral for the foreseeable future.

Levi Strauss (LEVI)

Red-Hot Athleisure Puts Lid On Jeans-Maker Levi Strauss Stock Upside

Source: Shutterstock

Gain From IPO Price: 35%

Last (and maybe least) on this list is an older company which recently made its return to Wall Street.

Blue jeans giant Levi Strauss (NYSE:LEVI) returned to the public markets in late March. The IPO was a smashing success. The stock opened up more than 30% above its $17 IPO price. LEVI stock has since largely held onto those gains — but not added to them — as first quarter numbers were a mixed bag that implied positive but slowing growth going forward.

Ultimately, it’s tough to see the upside scenario in LEVI stock. The athleisure trend remains as hot as ever, and that trend continues to steal share from the jeans market. As such, Levi Strauss finds itself on the wrong side of the apparel tracks. To be sure, that doesn’t mean growth will flat-line. But, it will put a lid on growth, and a lid on growth will hurt LEVI stock, which currently trades at above what I peg as a reasonable 2019 price target for the stock.

As of this writing, Luke Lango was long LYFT, PINS, YETI, and SPOT, and may initiate a long position in JMIA within the next 72 hours. 

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4 Upcoming IPOs to Watch That Aren’t Named Lyft

Source: Shutterstock
Source: Shutterstock
With stocks on the rise, the environment is ideal for new IPOs. Today we definitely got evidence of this with the Lyft (NASDAQ:LYFT) offering. The company priced its shares at $72, raising about $2.2 billion. So far in early trading, Lyft stock is up 22%.
The company is one of the largest players in the fast-growing ride-hailing market. Last year, the company posted revenues of $2.2 billion, up from $1.1 billion.
But of course, there are still other new IPOs ready to hit the markets. And it’s important to keep in mind that the Lyft deal could overshadow them.
So what are these deals? Well, let’s take a look at four that will launch within the next week or so …Source: Shutterstock

With stocks on the rise, the environment is ideal for new IPOs. Today we definitely got evidence of this with the Lyft (NASDAQ:LYFT) offering. The company priced its shares at $72, raising about $2.2 billion. So far in early trading, Lyft stock is up 22%.

The company is one of the largest players in the fast-growing ride-hailing market. Last year, the company posted revenues of $2.2 billion, up from $1.1 billion.

But of course, there are still other new IPOs ready to hit the markets. And it’s important to keep in mind that the Lyft deal could overshadow them.

So what are these deals? Well, let’s take a look at four that will launch within the next week or so …

Upcoming IPOs: NGM Biopharmaceuticals

With Trial Results Due, This Could Be a Breakout Year for Cara Stock

Source: Shutterstock

Founded in 2008, NGM Biopharmaceuticals is a clinical-stage biotech company that is developing a variety of treatments, such as for liver, cardio-metabolic oncologic and ophthalmic diseases.

According to the company: “Our process pairs a research approach that generates novel insights into pathways demonstrating powerful biological effect with the expertise in protein and antibody engineering to transform those insights into product candidates. We then rapidly advance the program to evaluate the effect of these product candidates on biomarkers of disease or target activity in order to enable early demonstration of human proof of concept.”

Currently, the company has seven product candidates. And as for the lead, it is NGM282, which will go into Phase 2B trials soon. The drug is focused on non-alcoholic steatohepatitis or NASH.

A key for NGM Biopharmaceuticals is the collaboration with Merck (NYSE:MRK), which the company recently extended by two years. The deal involves up to $20 million in R&D as well as milestone payments. Although, MRK did terminate its license for NGM’s GDF15 program (its focused on obesity).

Regarding the IPO, NGM plans to issue 6.7 million shares at a range of $14 to $16 and to list on the Nasdaq under the symbol of NGM. The lead underwriters include Goldman Sachs, Citi and Cowen.

Upcoming IPOs: Ruhnn

Source: Shutterstock

Ruhnn has built the leading platform for so-called KOLs, or key opinion leaders, in China. These are people who are also known as influencers — that is, they can have much power to impact fashion and culture via social media. Of course, they also have a big impact on commerce. So Ruhnn’s platform connects its KOLs — which account for 148.4 million fans — with brands, online retailers and manufacturers.

Growth has certainly been robust. From 2017 to 2018, revenues jumped from RMB577.9 to RMB947.6. Although, the company continues to lose money.

Yet the market opportunity looks bright. According to Ruhnn’s S-1, the spending on KOL facilitators is forecasted to grow at a 38.9% CAGR (compound annual growth rate) to RMB200.9 billion by 2022.

As for the IPO, Ruhnn plans to issue 10 million shares at a range of $11.50 and to $13.50 and to list on the Nasdaq under the ticker of RUHN. The lead underwriters include Citi and UBS.

Upcoming IPOs: Silk Road Medical

Source: Shutterstock

Silk Road Medical is a medical device company that helps to reduce the risk of stroke. The company’s approach is called transcarotid artery revascularization, or TCAR, which is minimally invasive and leverages innovative endovascular techniques.

Note that the company has received FDA approvals and obtained Medicare coverage. As of last year, there were 4,600 procedures performed for TCAR. From 2017 to 2018, revenues soared by 142% to $34.6 million.

Silk Road Medical estimates that there are 4.3 million people who suffer from carotid artery disease in the United States and there were 427,000 new diagnoses in 2018. Based on this, the company estimates the market opportunity at about $2.6 billion.

In terms of the IPO, Silk Road Medical plans to issue 4.7 million shares at a range of $15 to $17 and list on the Nasdaq under the ticker of SILK. The lead underwriters on the offering include JPMorgan (NYSE:JPM) and Bank of America (NYSE:BAC).

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Get In on the Next Big IPO Without the Volatility

For the most part, initial public offerings are a sucker’s game.

IPOs, especially for name-brand tech companies, generate lots of hype. And even if the company is solid, it often can’t justify its debut stock price – let alone any surges in its first few days on the market.

But that doesn’t mean you can’t get in on some of the most exciting upcoming IPOs – like Uber, Lyft, Slack, Pinterest, or Airbnb – and still limit your risk.

In fact, we’ve got a pick today that gives you some of the hottest IPOs while taking all the guesswork (and grunt work) out of trying to pick winners.

Plus, we’ll also give you the opportunity to grab multiple upcoming IPO picks in a red-hot industry that are ready to hit the market in 2019. Each of these is capable of unleashing millions of dollars into the market, so you won’t want to miss these opportunities.

But first up, one of best ways to approach the IPO market – especially if you don’t have the time or patience to research every new offering individually – is through a well-managed ETF.

Well-managed doesn’t just mean selecting the most promising public offerings. It also means holding onto the ones that still have room to grow. That way you both minimize your risk and maximize your gains.

That’s why we like one particular ETF that gives you access to the broad IPO market while blending both new offerings and older ones.

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And before you worry that an ETF is going to dilute your gains too much, keep in mind that this pick has beaten the S&P 500 by more than 50% over the last two years.

So if you’ve always wanted to get into the IPO game but were (rightly) concerned about volatility and overhyped offerings, this is your ticket to cutting edge of the stock market.

And you can get there without sweating endlessly over a new offering’s financials…

Your Quickest, Easiest Entry Point into Venture Capitalism

First Trust US Equity Opportunities ETF Fund (NYSE: FPX) is an ETF with roughly 100 holdings. These include some of the biggest companies to go public in the last few years. They include Match Group Inc. (NASDAQ: MTCH), Coupa Software Inc. (NASDAQ: COUP), and Wayfair Inc. (NYSE: W).

Because most of the stocks in FPX only make up about 1% each of the portfolio, no one stock is going to sink the fund. And First Trust balances out those young startups with some big names that have been around for a while, like Hewlett Packard Enterprise Co. (NYSE: HPE), Tyson Foods Inc. (NYSE: TSN), and Kraft Heinz Co. (NASDAQ: KHC), which provide an extra layer of protection.

The principle in play here is that it’s foolish to invest in IPOs and then drop them once they’re no longer new. So FPX holds on to select stocks for the long haul. That way the fund doesn’t get burned by selling stocks before the initial volatility has settled down.

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One great feature of FPX is how diversified it is. It’s not just grabbing tech stocks – though there are certainly plenty of them – but includes offerings across the finance, auto, retail, and energy industries.

And because the fund’s managers are researching every IPO before they decide to include it in the fund, you can rest assured that your money isn’t going into every overhyped offering that hits the market.

Let’s take a look at some of the winners this fund has chosen over the years…

  • Square Inc. (NYSE: SQ) is probably best known for the adapters people can attach to their smartphones to accept credit cards, leveling the playing field for artists and small startups. It now offers a wide range of products for financial transactions, including the popular Cash App for consumer-to-consumer transactions. That app can now also be used to purchase Bitcoin, and we can no doubt expect even more functionality in the future. Now at more than eight and a half times its debut price in November 2016, this stock likely still has room to run.
  • SailPoint Technologies Holdings Inc. (NYSE: SAIL) is a provider of identity governance services for more than 1,000 global customers. Identity governance is one of those less exciting, but critical services, allowing enterprises to manage their cloud-based and on-site applications and data effectively, efficiently, and safely. SailPoint stock is up 162% since its November 2017 debut, and the need for its services is only growing.
  • Etsy Inc. (NASDAQ: ETSY) brings e-commerce to the arts, crafts, and vintage items market. Its earnings per share (EPS) soared into the black in the 2017 fiscal year, and according to FactSet, is projected to triple between now and 2021. Despite a rough start to its appearance on the market, Etsy has now doubled since its November 2015 debut.
  • ZenDesk Inc. (NYSE: ZEN) is bringing customer service into the 21st century, providing software solutions to make the process run quickly and efficiently. Like Etsy, ZenDesk’s EPS went sharply positive within the last couple years. More impressively, it is expected to multiply nearly seven times by 2022. Those rising fortunes have boosted the stock 768% since it debuted in May 2014.

That said, if you want to up your game and grab a potential rocket stock on the IPO market, we’ve got an opportunity – a whole series of opportunities, in fact – you won’t want to miss.

Source: Money Morning