Last week, the IPO market continued it winning ways, with ten companies launching their offerings.
While three were duds – especially Wanda Sports Group (NASDAQ:WSG), which plunged by 36% — there were several big winners. Note that Vistra Energy (NYSE:VST), Castle Biosciences (NASDAQ:CSTL) and Livongo Health (NASDAQ:LVGO) gained over 30%.
But for August, expect things to calm down. However, this is not because there are emerging problems or challenges. Rather, the month is generally inactive because many investors are on vacation (this is especially the case in the back half of the month).
Yet there are still some interesting upcoming IPOs for August. Let’s take a look at six:
Dynatrace operates a cloud-based platform that leverages AI to help with data management, app performance, user experience and hybrid architectures. All of this is part of “software intelligence” that provides for comprehensive monitoring and actionable insights to improve cloud migrations, and DevOps success.
From fiscal 2017 to 2019, subscription revenues have gone from $232.8 million to $349.8 million. The company focuses on large enterprise customers, with annual revenues in excess of $750 million.
Regarding the upcoming IPO, Dynatrace expects to offer 35.6 million shares at a range of $11 to $13 and the lead underwriters include Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM), and Citigroup (NYSE:C). The stock will be listed on the NYSE under the symbol of DT.
Kura Sushi USA (KRUS)
Kura Sushi USA refers to itself as “a fast-growing technology-enabled Japanese restaurant concept.” Founded in 2008, the company has gone on to build over 400 restaurants (it’s the largest sushi chain in the U.S.). The “Kura Experience” is about providing authentic Japanese cuisine with a nice dining experience and an affordable check. But there are also innovations like on-demand order screens and even conveyor belts to efficiently deliver the food. In the kitchen, there are sushi robots, RFID readers and software that uses food replenishment algorithms!
And growth has been strong. From fiscal 2017 to 2018, sales jumped by nearly 40% to $51.7 million and net income spiked by 146% to $1.7 million. There has been comparable restaurant growth for ten out of the last eleven quarters.
The upcoming Kura Sushi IPO will involve the issuance of 2.9 million shares at $14 to $16, with the listing on the NASDAQ under the symbol KRUS. The lead underwriters are BMO Capital Markets and Stephens.
Sundial Growers (SNDL)
Investors will soon have another cannabis stock to invest in: Sundial Growers. Based in Canada, the company is focused on the premium adult-use market for inhalable products. The strategy is to take a CPG (Consumer Products Goods) approach, such as with strong branding and sophisticated supply chains. The company has also acquired Bridge Farm, which will provide a footprint in the fast-growing CBD market.
Yet Sundial is still in the early phases. In the first quarter, revenues came to only $1.5 million.
The company plans to issue 10 million shares at a range of $12 to $14 and the lead underwriters include Cowen, BMO Capital Markets, RBC Capital Markets, Barclays (NYSE:BCS) and CIBC. The shares will also be listed on the NASDAQ under the symbol SNDL.
RAPT Therapeutics (RAPT)
RAPT Therapeutics, which is backed by investors like Kleiner Perkins, is a clinical-stage biotech company. The research is primarily focused on small molecules that adjust immune responses for various cancers.
In four years, the company has developed two drug candidates that both target C-C Motif Chemokine Receptor 4. But RAPT is exploring other targets as well.
As for the upcoming IPO, the company plans to offer 5 million shares at a range of $14 to $16 and the lead underwriters include Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), BMO Capital Markets and UBS Investment Bank (NYSE:UBS). The shares will be listed on the NASDAQ under the symbol RAPT.
AMTD International (HKIB)
AMTD International, based in Hong Kong, is the largest independent investment bank in Asia (in terms of the number and aggregate size of IPOs in Hong Kong and the U.S.). The firm is also the largest independent asset management operation that serves the PRC regional banks and tech companies.
While Asia has been slowing down, AMTD has still been able to keep up the momentum. Last year, revenues went from HK$723.2 million to HK$1.033 billion. The company is also highly profitable. In 2018, the profit was HK$525.1 million.
The lead underwriter of the IPO? Well, it’s actually AMTD International. But there are the following bookrunners: Loop Capital Markets, MasterLink, and ViewTrade.
AMTD International expects to issue 20.8 million shares at a range of $8.10 to $8.48 on the NYSE under the ticker HKIB.
InMode, which is based in Israel, is a developer of energy-based, minimally-invasive surgical aesthetic and medical treatment solutions. The technology is for three categories: face and body contouring; medical aesthetics; and women’s health. At the heart of InMode is RF energy, which penetrates deep into a person’s subdermal fat. This makes it possible to remodel the tissue.
During the first quarter, revenues came to $30.6 million, up from $20.9 million in the same period a year ago. Net income was $10.2 million.
The U.S. is the biggest market, with over 2,400 customers and 18 FDA clearances. The customers include plastic surgeons, dermatologists, and aesthetic obstetricians/gynecologists.
Regarding the upcoming IPO, InMode intends on issuing 5 million shares at a range of $14 to $16 and the lead underwriters are Barclays and UBS Investment Bank. The company expects to list the shares on the NASDAQ under the symbol INMD.
What Is an IPO Anyway?
For many people, IPOs are kind of a mystery. After all, it does seem kind of strange for a company’s stock to zoom on the first day of trading, right?
So here’s a quick explanation of IPOs. An IPO is when a company issues its shares to the public on an exchange, such as the Nasdaq or NYSE. Often this process results in raising a large amount of money, say over $100 million.
Getting to this point is not easy. Upcoming IPOs need to have audited books, a strong financial infrastructure and an experienced management team. There will also need to be advisors — called investment bankers or underwriters — who will provide the guidance through the process. This involves putting together a disclosure document, called an S-1 (which you can download at sec.gov), and having a roadshow, in which management makes presentations to investors.
The advisors will generally undervalue the shares, allowing for the pop. It’s a way to reward investors. Yet these investors are usually institutions, hedge funds and wealthy people.
Yes, it’s kind of unfair, but the system has seen little change over the decades. Despite this, individual investors have still made lots of money from IPOs — such as from Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) and Facebook (NASDAQ:FB) — regardless of if they got the shares at the offering price.
Tom Taulli is the author of the upcoming book, Artificial Intelligence Basics: A Non-Technical Introduction. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.