Fareva’s pharmaceutical plant in Pocé-sur-Cisse, France. Fareva is a manufacturing partner for CureVac’s Covid vaccine.
GUILLAUME SOUVANT/AFP via Getty Images
The market for initial public offerings has recently delivered some great first-day gains for investors who were able to get shares before the companies went public.
But not everyone receives these types of opportunities. Most retail investors have to wait until companies start publicly trading to buy stock. Barron’s looked at businesses that have gone public in the past 12 months to find some strong performers.
First, we searched for companies that listed via a traditional initial public offering: This meant we filtered out businesses that merged with special purpose acquisition companies, or SPACs. Then, we searched for companies that went public on either the New York Stock Exchange or the Nasdaq. We also focused on entities that had at least a $1 billion market capitalization. We narrowed our search to companies with the highest total returns from their stock offering prices. .
That left us with 11 names. First up: CureVac (ticker: CVAC), which was the screen’s best-performing IPO and had a total return of 596.75%. CureVac specializes in the messenger RNA, or mRNA, technology that is the basis of several leading Covid-19 vaccine programs. The German biotech company went public in August at $16 a share and soared 249% in its first day, with the stock closing at $55.90. In January, CureVac struck a deal with Bayer to accelerate the development and supply of its Covid-19 vaccine candidate. The company’s mRNA-based Covid-19 vaccine is now in clinical trials, and Phase2b/3 data is expected this summer. Since its IPO, the stock has nearly doubled, closingFriday at $111.48 .
Strong performances need not be dictated by success on the first day of trading. Four of the companies that made our list were busted deals—meaning that their shares fell below their IPO prices on the first day of trading.
Case in point: ZIM Integrated Shipping (ZIM). The asset-light shipping company went public in January with a $15 offering price, but closed that day at $11.50. Yet by May 19, ZIM’s stock had gained 295% after it reported first-quarter earnings of $589.6 million, or $5.35 a share. The company also declared a special cash dividend of $2 a share. ZIM is the second-best-performing IPO in the past 12 months, based on a total return of 209.33%, according to FactSet. It closed on Friday at $46.40.
Another example is Academy Sports & Outdoors (ASO): The company went public in October with a $13 offering price, with the stock closing at $12.99 during its first day of public trading. Academy was profitable when it went public, a rarity in the IPO market. In March, the company reported that its net income soared 416%, to $91.5 million, or 97 cents a share, for its fourth fiscal quarter ended Jan. 30. Its shares have nearly tripled since the IPO, and were trading at $36.53 on Friday. Academy Sports ranks third with a total return from the offering price of 181%, FactSet said.
Strong Gainers
These companies all went public in the last year and produced high total returns compared to their IPO prices.
Source: FactSet. Data as of May 29.
Rounding out this category are Corsair Gaming (CRSR), a California company that makes performance gear for gamers, and the Dubai-based Yalla Group (YALA), which makes a voice-chat app used in the Middle East and North Africa called Yalla. Both stocks have rebounded strongly after less-than-stellar September IPOs.
Some companies that made our list soared during their debuts, but have since seen their shares retreat. Still, these companies are producing gains.
Consider BigCommerce (BIGC), which provides a cloud e-commerce platform that is used by such customers as SkullCandy, Savannah Bee Co, and the Cleveland Cavaliers. BigCommerce went public in August with a $24 offering price—and the stock soared 201% that day, closing at $72.27. Since the IPO, the shares have fallen nearly 25%, amid a broader technology selloff.
The company, however, has reported some positive developments, like a deal in February that would give BigCommerce customers the ability to sell directly on Walmart Marketplace. It also reported better-than-expected fourth-quarter results. BigCommerce has produced a total return of nearly 127%, according to FactSet.
Other companies have seen their shares jump since going public. Dream Finders Homes (DFH), which designs, builds, and sells homes in high-growth markets, was already profitable when it made its trading debut in January at $13 a share. Shares soared 61%, $20.95 on its first day. Prices for houses in March grew at the fastest rate since 2005, which has helped real estate stocks. Dream Finders stock has gained nearly 52% since its IPO, trading Friday at $31.77. Dream Finders notched a total return from offering price of 144.38%.
Write to Luisa Beltran at [email protected]
