IPOs can be a risky game, yes there are amazing success stories, few of them instant as the dotcom bubble will attrest to. Here are the worst of of 2017. $APRN $METC $QD $OVID $ZYME $JLL $OBSV
IPOs can be a risky game, yes there are amazing success stories, few of them instant as the dotcom bubble will attest to. Some such as Blue Apron $APRN brought instant pain. Here are the worst of 2017.
Blue Apron shares were seared right from the day it went public.
We have included charts from KnovaWave @knovawave that give an indication of the extent of the moves through Murrey Math Lines and Ichimoku. Notice also many of these top IPOs are substantially off 2017 lows yet still down huge from their IPO price.
1. Blue Apron ($APRN): Down 59.60% at $4.04 Close
Blue Apron (NYSE: $APRN) wins the uncoverted crown of 2017’s worst IPO. Blue Apron going public came right on the heals of $SNAP selling off after a IPO rally turned down 50%. It is fair to say $APRN was also a victim of predatory high frequency short selling. No doubt given the profile, for shareholders this is also the most disappointing IPO of 2017. Snapchat $SNAP is down around 12% by comparison.
Blue Apron was priced just after the $SNAP rout hence it was already setting a sad tone. 30 million shares were priced at $10 per share. This was a third below the its original range of $15 to $17. In cold hard cash the company raised $300 million when it was expecting $480 million. This $180 million difference made it harder with analysts generally expecting a large loss for 2018 witht downgrades aplenty and class action lawsuits from investors.
Canaccord Genuity analysts wrote in a report on Nov. 30, “Blue Apron faces pressure from well-capitalized technology players, such as Amazon, which has been known to run loss leading segments in order to grow market share.”
Whatever could go wrong has, including messing up its transition to a new fulfillment center in Linden, New Jersey (part of the capital raising objective). This saw more than bad press it saw a loss of customers. There was a slew of customers receiving orders late or with incorrect ingredients.
Chaos ensued when Amazon bought Whole Foods Market. This saw the entire grocery industry sold off leading up to Blue Apron’s public debut. This also partly explains the move from $17 to $10 on pricing. Than in late November, Blue Apron co-founder Matt Salzberg stepped down as CEO, and CFO Brad Dickerson took over. The comapny needs customers to return and champion it’s service, or $AMZN to buy it going forward it appears.
Ramaco Not Benefiting From Coal’s Rebound Yet
2. Ramaco Resources ($METC): Down 54.7% at $6.11 Close
Ramaco (NASDAQ $METC) was always going to be a tough sell as renewable energy continued to grow, natural gas prices remained soft and mountains of coal inventories remained around the world. Ramaco Resources sells metallurgic coal mined from the Northern Appalachian region. The company raised $81 million, pricing 6 million shares at the midpoint of $13.50 per share, it has lost half its value since. $METC shares rallied Friday (the date of writing) 8.74% on coal upgrades, yet is still down 54.7% since the IPO.
The company has faced headwinds since going public. $METC faced resistance to a new mine in Wyoming which has proved costly, but really should not have unexpected. Losses have been wider than expected, The second quarter ended June 30 loss was three times wider than the loss in its year-ago period.
Qudian Plagued By Shareholder Lawsuits
3. Qudian ($QD): Down 45.54% at $13.07 Close
Qudian (NYSE $QD) shares have had a wild ride since they debuted in October. The Chinese online lender’s shares initially spiked over $35 from its $24 IPO price. From there it well around two thirds of its price to be down 45% from the IPO price. There in no doubt Qudian has had some ‘difficulties’. The game changer for the company came when Chinese regulators changed the rules down on the type of lending Qudian does, “online micro-lending.” With that came the obvious uncertainty reflected in the lower shar price.
In an Amazon moment, Alipay, a subsidiary of Aibaba (NYSE: $BABA) responded proactively following the statement from the Chinese government. This has had the knock effect of Qudian having to lower its interest rates on loans originated from Alipay. Alipay originates about two-thirds of Qudian’s loans, and it wants to reduce rates on Qudian loans by one-third. ‘
In a nutshell from the $QD IPO projections 30% of Qudian’s profits on those loans are now gone. While Qudian is still able to charge higher interest rates on non-Alipay loans, those are at a competitive disadvantage now also. With China in a hectic risk on take that would even scare the most ardent free marketeer revenue and profits are still soaring for Qudian. The level of uncertainty remains as does the risk. Is the 50% haircut in price enough?
ZymeWorks Pipeline has Analysts Wary
4. ZymeWorks ($ZYME): Down 42.3% at $7.50 Close
ZymeWorks (NYSE $ZYME) is a Canadian biotech company that is working on drugs for breast cancer. Their lead product candidate, ZW25, is a novel bispecific (dual-targeting) antibody currently being evaluated in an adaptive Phase 1 clinical trial, targeting two distinct domains of the human epidermal growth factor receptor 2, or HER2, a protein that promotes the growth of cancer cells.
Brokers have been been bearish on the prospects of the clinical results of ZW25t. The company raised $59 million selling 4.5 million shares at $13 a share, which was at the low end of a $13 to $16 range.
Falling direct sales hang over J.Jill
5. J. Jill ($JILL): Down -39.15% at $7.91 Close
J. Jill (NYSE $JILL) J.Jill is an ‘omnichannel premier retailer and nationally recognized women’s apparel brand’. No surprise to see $JILL on the list given the difficulty of retail in 2017. With thst background the IPO came on at $13, below its range of $14 to $16. After solid first-quarter results the stock seemed to be defying the retail washout. Problems started after better than expeted second-quarter results ccame with weak third-quarter guidance. From that they cut the outlook further, which say the stock lose half it’s value in one day.
The company went from years of double digit comps to comparable store sales being forecast to decline 3% to 5% year over year during the third quarter and earnings per share (EPS) of just $0.07 to $0.09. With online sales crucial in the Amazon era what worried investors was the weakness in the company’s direct sales channel. Problems with direct-to-consumer sales could suggest falling popularity and trend awareness, crucial in a premier apparel brand.
Ovid drug pipline has investors takinga wait and see approach
6. Ovid Therapeutics ($OVID): Down 38.6% at $9.92 Close
Ovid Therapeutics (Nasdaq $OVID) is New York a based biopharmaceutical company using its BoldMedicine™ approach to develop therapies that transform the lives of patients with rare neurological disorders. Ovid’s drug candidate, OV101, is currently in development for the treatment of Angelman syndrome and Fragile X syndrome. Ovid has initiated the Phase 2 STARS trial of OV101 in adults with Angelman syndrome and a Phase 1 trial in adolescents with Angelman syndrome or Fragile X syndrome.
Ovid raised $75 million by pricing 5 million shares at $15 per share, the low end of its range. The company struggled down below $13 on its first day of trading. Since then it has lost about 40% of it’s value. Ovid is also developing OV935 in collaboration with Takeda Pharmaceutical Company Limited for the treatment of rare epileptic encephalopathies and has initiated a Phase 1b/2a trial of OV935.biotech company. Ovid works on treatments for neurological disorders.
7. ObsEva ($OBSV): Down 33% at $10.00 Close
ObsEva (Nasdaq $OBSV) is a clinical-stage biopharmaceutical company founded in Switzerland in November 2012. ObsEva focuses on the development and commercialization of novel therapeutics for serious conditions that compromise a woman’s reproductive health and pregnancy. ObsEva expects to achieve a number of clinical and pipeline milestones over the remainder of 2017 and 2018. has lost the most since it started trading.
The company raised $96 million, pricing 6.5 million shares at $15 per share, in the midpoint of the range. It has not yet trade at $15, with a $14.70 high. At one point it had lost over half its value since it went public on Jan. 25 it has since bounced back to $10. Investors are holding back with $OBSV expected to continue to bleed money for some time. The risks of a developing biotech company.
- The close was taken as the trading day before Christmas December 22, 2017
Sources: ObsEva, Ovid, Blue Apron, ZymeWorks, J. Jill, Qudian, Ramaco, TradersCommunity
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