by Tom Taulli | December 13, 2012 12:00 pm
As I pointed out in a post yesterday, we’ve seen some top-notch IPOs for 2012. Four clocked returns of 100%+.
But of course, there were still plenty of duds. Hey, it’s just part of the process when dealing with new companies.
So here’s a look at 2012’s worst performers (the returns are based on the offering prices):
YTD Return: -44%
Date of IPO: 05/09/12
Founded in 2002, Audience (NASDAQ:ADNC) is a pioneer in voice technologies for mobile phones. Its services have required intensive R&D, delving into such areas as neuroscience, speech analysis, acoustics, spatial audio and CASA (a process that maps sound-separation functions in human hearing). Keep in mind that roughly two-thirds of Audience’s R&D team have advanced engineering degrees.
By the time of the IPO, Audience was a hyper-growth company. From 2009 to 2011, revenues surged from $5.7 million to $97.7 million. The company was even profitable for the past two years.
But according to the prospectus, about 80% of its revenues came from Apple (NASDAQ:AAPL). And when the company launched its iPhone 5, it nixed Audience as a supplier. On the news, the stock plunged 63%.
Back to the drawing board.
4. Enphase Energy
YTD Return: -52%
Date of IPO: 03/29/12
Enphase Energy (NASDAQ:ENPH) develops so-called microinverter technology that helps solar companies increase energy production, improve design and allow for cost-effective installations. It is a breakthrough technology that is trying to replace the traditional approach, known as inverters. These have been around for about two decades.
Unfortunately, the solar industry has been horrible for investors in 2012. With government cutbacks in the U.S. and Europe, the industry is facing much slower growth.
Despite this dour environment, Enphase continues to post solid results. In the third quarter, the company announced revenues of $60.8 million, up 36% on a year-over-year basis.
But investors don’t seem to care. Enphase’s stock has seen a fairly steady, grinding loss of value since its IPO.
YTD Return: -69%
Date of IPO: 02/21/12
Ceres (NASDAQ:CERE) creates seeds that produce renewable feedstocks, which include corn and sugarcane, to replace fossil fuels. This involves a combination of complex plant breeding and biotechnology. Ceres believes that its feedstocks increase biomass productivity, reduce crop inputs and improve the cultivation of marginal land.
The initial focus is on the Brazilian market, which relies heavily on renewable energy sources. Still, it has not been easy to get traction because of the extreme drought conditions.
Ceres is also a fairly small operator. During the past year, revenues dropped from $6.6 million to $5.4 million. A key factor for the decline was a reduction in collaborative research and government grants.
YTD Return: -72%
Date of IPO: 03/28/12
CafePress (NASDAQ:PRSS) operates a website that allows users to design their own products, like mugs, caps and even iPhone covers. It’s a cool service, and the company shipped 7.8 million items in 2011.
The problem? Well, CafePress was betting on substantial demand for presidential election items. But as seen in its fiscal Q2, there was not much interest in Romney and Obama mugs. The company’s outlook for Q3 was for revenues of $42.5 million to $45 million. The Street, on the other hand, was forecasting $50 million. On the news, the stock price plunged over 40%.
YTD Return: -81%
Date of IPO: 04/24/12
Envivio (NASDAQ:ENVI) develops software to help with the processing and distribution of high-quality video. The company has a proprietary compression and IP networking system, which involves a complex array of encoders, transcoders and network media processors. The technology allows for delivery across any type of platform, whether it be television, tablets, smartphones, netbooks or laptops.
While the industry is large, with a market size of $3 billion, it is still highly sensitive to the macroeconomy. So in mid-August, the company announced a warning because of a slowdown in North America and Europe. It dropped the revenue guidance for fiscal Q2 to between $10 million and $11 million, which was down from the prior forecast of $17 million to $18 million. Because of this huge miss, Envivio’s stock collapsed.
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders.” Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
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