This is slated to be the busiest week for IPOs since June of 2015. And it’s not just tech anymore…
This week brings 14 new offerings to the market in retail, real estate, healthcare, and… beanbag chairs.
Yes, beanbag chairs.
Look, IPOs are great fun for underwriters, institutions, corporate insiders ,and the media. But they tend to be bad, bad news for regular investors like us.
Tim Melvin over at Money Morning said it best…
“We can't get shares of the IPOs we all want, and we don't want shares in the IPOs we can get.”
(Read his great article here.)
But there are occasionally disruptive technologies and good companies intent on returning cash to their shareholders. And this week, there is just one offering that's interesting enough for me to recommend it as a “BUY.”
First let's weed through the garbage…
BJ’s Wholesale Club Holdings Inc. (NYSE:BJ) – $733 million offering – $15-17 per share
Let's start with a HUGE offering from a company with… nothing to offer. The bulk retail chain with 215 locations up and down the East Coast is set for an offering worth a whopping $733 million. Really what's happening here is a private equity firm trying to shuffle around holdings to maximize its own profit, and shareholders and index funds will suffer. After a PE buyout took the company private in 2011, saddling them with $2 billion in debt, it's back on offer. Naturally management intends to use the proceeds pf the IPO to pay down debt and accrued interest. There's no potential for growth here. Even worse, there's no hope of a dividend for shareholders (its debt has covenants restricting any future dividend payments). Plus, private equity owners will keep a tight grip on the company, retaining the 69% stake they need to push through anything they want.
Our Favorite Analysis: “This Is the Big Reason Investors Should Stay Away from the BJ's IPO” (Marketwatch)
Domo Inc. (Nasdaq: DOMO) – $511 million offering – $19-22 per share
Next up is a hilarious case of overinflated Silicon Valley egoism. The software company has some interesting business intelligence technology, but this is a disaster of an IPO. Domo was originally pushing itself at a valuation of over $2 billion, but the market smacked that idea down. However Domo is still going through with the IPO. According to its SEC filing, Domo is facing a serious credit squeeze and needs to raise capital by August 2018 or significantly reduce its operating budget. To move ahead, the company's been forced to implement a 15-to-1 reverse stock split pre-filing. Could it get any more embarrassing? Well, yes. The company also revealed in its S-1 that CEO (and former child actor) Josh James has apparently been funneling gobs of money into companies he owns, including $700,000 to lease a private plane for himself from himself. How is this guy still in charge? Steer clear!
Our Favorite Analysis: “Investors Said Domo Was Worth $2.28 Billion, But…” (Business Insider)
EverQuote Inc. (Nasdaq: EVER) – $75 million offering – $15-17 per share
Now this is an investment worth your time. EverQuote uses data to match up insurance shoppers with the right policy – on a pretty massive scale. 10 million consumers visit their website each month – it's free for users – and EverQuote gets paid on referral fees from insurers. Currently they do almost exclusively auto loans – accounting 97% of revenue in 2017 – but they're rapidly expanding into home and life insurance, so there’s an insane amount of upside here. This is a low-profile IPO that’s not getting much attention in a stable industry, and there don't look to be any evil Wall Street types behind the scenes looking to exploit mom and pop investors.
Our Favorite Analysis: “Everquote IPO Update: Cheap Valuation Spells Potential” (Seeking Alpha)
Here's the complete list, courtesy of Nasdaq.
| Company Name | Symbol | Market | Price | Shares | Offer Amount | Expected IPO Date |
|---|---|---|---|---|---|---|
| DOMO, INC. | DOMO | NASDAQ | $19.00-22.00 | 9,200,000 | $232 mm | 6/29/2018 |
| FORTY SEVEN, INC. | FTSV | NASDAQ | $14.00-16.00 | 6,700,000 | $123 mm | 6/28/2018 |
| EVERQUOTE, INC. | EVER | NASDAQ | $15.00-17.00 | 4,687,500 | $91.6 mm | 6/28/2018 |
| TRICIDA, INC. | TCDA | NASDAQ | $16.00-18.00 | 10,300,000 | $213 mm | 6/28/2018 |
| BJ'S WHOLESALE CLUB HOLDINGS, INC. | BJ | NYSE | $15.00-17.00 | 37,500,000 | $733 mm | 6/28/2018 |
| NEURONETICS, INC. | STIM | NASDAQ | $14.00-16.00 | 5,000,000 | $92 mm | 6/28/2018 |
| NEW FRONTIER CORP | NFC'U | NYSE | $10 | 23,000,000 | $264 mm | 6/28/2018 |
| GOODBULK LTD. | GBLK | NASDAQ | $15.50-17.50 | 8,500,000 | $171 mm | 6/28/2018 |
| BRIGHTVIEW HOLDINGS, INC. | BV | NYSE | $22.00-25.00 | 21,300,000 | $612 mm | 6/28/2018 |
| TRANSLATE BIO, INC. | TBIO | NASDAQ | $12.00-14.00 | 7,700,000 | $124 mm | 6/28/2018 |
| UXIN LTD | UXIN | NASDAQ | $10.50-12.50 | 38,000,000 | $546 mm | 6/27/2018 |
| HYRECAR INC. | HYRE | NASDAQ | $5.00-6.00 | 2,100,000 | $14.5 mm | 6/27/2018 |
| LOVESAC CO | LOVE | NASDAQ | $16 | 3,500,000 | $56 mm | 6/27/2018 |
| NEON THERAPEUTICS, INC. | NTGN | NASDAQ | $16 | 6,250,000 | $100 mm | 6/27/2018 |
