Just this week, IPOs hit a rough patch as companies like HD Supply (HDS) and CDW (CDW) slashed the pricing on their deals, GDC Technology postponed its transaction and Tremor Video (TRMR) saw its offering plunge 15% on its first day of trading.
Of course, a correction was to be expected. IPOs have been red-hot for most of the rest of the year. In all, we saw 88 deals — including a record May that saw 30 companies hit the market — that returned an average of nearly 20%. You can chalk up much of that success to the general market, which has been in full bull mode for most of the year.
But which IPOs really stood out amid the highs and the lows? Here’s a look at the three best and three worst offerings so far in 2013:
Marketo (MKTO) is a top cloud operator for marketing automation programs. MKTO’s software helps with tracking channels like web sites and mobile visits. Customers can even develop apps on the platform and integrate with key systems like Salesforce.com (CRM) and Microsoft’s (MSFT) Dynamics CRM.
Marketo has been growing like a weed, with revenues soaring 131% to $32.4 million in 2011, then another 80% to $58.4 million in 2012. However, the company still is deeply in the red — MKTO lost $34.4 million in 2012, which was nearly 50% worse than what it did in 2011.
Ultimately, Marketo might be buyout bait. Keep in mind that within the past year or so, we’ve already seen two mega-deals within the space: Oracle’s (ORCL) $871 million purchase of Eloqua and Salesforce.com’s $2.5 billion acquisition of ExactTarget.
UBIC (UBIC) develops Asian-language tools to help businesses with legal discovery (the pre-trial phase), with a focus on cross-border litigation on matters such as intellectual property disputes, claims regarding the Foreign Corrupt Practices Act and product liability investigations.
A key to the company’s software is its proprietary language engine. It effectively handles the complexities of character-based languages, which can be extremely tough to decode.
Recent pre-IPO performance is a bit of a concern, however. For the nine months ended Dec. 31, 2012, revenues fell 6.3% to $40.9 million, and the company saw deterioration in its manual review services business, which has attracted more competition as of late.
Winner: Stemline Therapeutics
Stemline Therapeutics (STML) is a biotechnology company whose clinical-stage products target cancer stem cells — a highly competitive market that includes companies such as Boston Biomedical, Eclipse Therapeutics, OncoMed Pharmaceuticals and Verastem (VSTM).
In early June, Stemline received the FDA orphan drug designation — a special status for rare diseases or conditions that imparts tax and marketing benefits — for SL-401, which targets a rare blood disease called blastic plasmacytoid dendritic cell neoplasm. The news earned STML a couple “buy” recommendations from analyst firms including Ladenburg Thalmann and Aegis Capital, and the stock moved up nearly 75% in the rest of the month alone.
Loser: KaloBios Pharmaceuticals
Of course, not all biotech IPOs have been winners. Just look at poor KaloBios Pharmaceuticals (KBIO), which develops treatments for monoclonal antibodies (mAbs) for cancer and serious respiratory diseases.
KaloBios’ offering was troubled from the start. KBIO priced the deal at $8, which was at the low end of its range, and the stock has undergone a steady decline ever since, minus a quick snap-back on the last day of the second quarter.
KaloBios does have a development agreement with French pharmaceutical giant Sanofi (SNY), and in April, the pair received fast-track status for KB001A, an antibody fragment meant to protect against bacterial pneumonia.
ExOne (XONE) is a 3D printer company that got its start back in 2005 — and it nearly failed. However, venture capitalist Kent Rockwell came in and made a $41 million investment from his personal funds and put in place a top-notch management team that refocused the company on the industrial market.
Customers now include Ford (F), Tesla (TSLA) and Boeing (BA), which have all helped XONE to a tripling in revenues to $7.9 million in the most recent quarter. (Though the company did take a slightly higher loss of $1.9 million, up from $1.5 million in the year-ago period.)
Loser: Professional Diversity Network
However, the company is fairly small, with over 2.5 million members, and much of its meager revenues actually come from job postings from two customers — Apollo Group (APOL) and … well, LinkedIn. In Q1, sales declined nearly 40% year-over-year to $920,000, and the company fell to a net loss of $482,000 from a profit of $706,000.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.