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Tradeweb Markets, an electronic trading platform backed by Blackstone, went public Thursday at $27 a share but opened on the Nasdaq at $34.26, a significant premium.
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Original price talk of 27.2 million shares at $24 to $26 was twice raised, eventually settling at 40 million shares at $27.
“The IPO trend is definitely up, companies are looking to price at the high end of the range, or better,” said Santosh Rao, who follows IPOs as head of research for Manhattan Venture.
Two other smaller IPOs — medical device maker Silk Road Medical and diabetes biotech firm NGM Bio, also priced at the high end of their ranges. Like Tradeweb, Silk Road significantly increased the size of its offering, from 4.7 million shares at $15 to $17 each, to 6 million shares at $19 to $20, and then priced at $20 and opened on the Nasdaq at $33.15.
The much-anticipated IPO rush started with jeans legend Levi Strauss, which went public on March 21 at $17 and is still trading well above its initial price, just below $22.
But ride-sharing company Lyft has taken investors on a roller coaster, pricing last week at $72, a significant premium to original talk of $62 to $68. Since then, it has traded as high as $88 and as low as $62 and is now trading close to its $72 original price.
This is not a normal year for IPOs. A tremendous amount is at stake for Wall Street, for the slate of tech unicorns that are seeking to go public — including Pinterest, Uber, Airbnb, WeWork and Palantir — and for the investing public.
About 230 companies are slated to go public this year, according to Renaissance Capital, which advises clients on IPOs and runs the Renaissance Capital IPO ETF, a basket of roughly the last 60 IPOs.
Depending on market conditions, the value of all those companies could be $700 billion to $1 trillion. The amount sold to the public could top $100 billion, which would surpass the record $96 billion raised in 2000.
On the one hand, conditions are perfect: The markets are close to new highs, the Renaissance Capital IPO ETF is up over 30 percent this year, one of the best performing ETFs.
Yet, the sheer number of IPOs that are going to be coming have left investors — those who will be buying this tidal wave — a bit nervous.
The early signs are good — is Lyft an anomaly? “It seems Lyft was the only one to price too high, maybe the original price of $62-$68 would have been better,” Rao said.
The message to the bankers from investors, Rao said, is: “You don’t have a free ride, there is a limit to how far you can go.”
That sentiment was echoed by Kathleen Smith at Renaissance, who is tasked with recommending whether her clients should be buying this wave of IPOs: “We’ve only seen one big unicorn out — Lyft. Let’s see how they price Pinterest, Uber and the other unicorns. They may or not be problematic as well.”
“A lot of money has been thrown at these companies — they have a high opinion of themselves.”