A resurgence in the U.S. IPO market appears to be taking shape, with eight new deals this week set to follow last week’s collection of strong first-day gainers that managed to raise a combined $1.8 billion.
While shares of freelance marketplace Fiverr International Ltd. (FVRR) soared 90% for the week’s biggest first-day gain, much of the market’s attention zeroed in on online pet retailer Chewy Inc. (CHWY). Its debut 59% rally was the biggest first-day return for an IPO exceeding a $1 billion deal size since Twitter Inc. (TWTR) roared 73% higher on its first day in 2013.
Speaking of tech listings, investors are awaiting another monster in the form of Slack, which is set to hit the markets this week by taking a page out of Spotify Technology’s (SPOT) playbook via a direct listing. Other offerings on the calendar include a burgeoning grocery chain and three biotech firms.
Here’s an overview of the five biggest offerings coming up later this week…
No. 5: Stoke Therapeutics (STOK)
Stoke is a Massachusetts-based biotech developing treatments for severe genetic diseases like Dravet syndrome, a form of epilepsy that develops during infancy. The firm’s lead drug candidate for treating the disease is STK-001, which is expected to begin Phase I/II clinical trials early next year. According to startup research firm Crunchbase, Stoke earns an estimated $2 million in revenue annually.
The IPO is expected to raise $101 million by selling 1.6 million shares at a price range between $14 and $16. At the $15 midpoint, the firm would achieve a market cap of $509 million. The top underwriters are JPMorgan Chase & Co. (JPM) and investment bank Cowen. Shares will list on the Nasdaq exchange under the ticker “STOK.”
No. 4: Atreca (BCEL)
Atreca operates out of Redwood City, California, and primarily develops immunotherapies for the treatment of a range of solid tumors. They work by pairing with the human immune system to determine which dangerous antibodies have the most effective response against tumors. The company raised a total of $223 million in private funding across six rounds, with the latest Series C being raised last September.
It will generate $125 million on the public markets by offering 7.35 million shares between $16 and $18 each. That would give Atreca a midpoint market cap of $484 million. Underwriters include Cowen and Evercore Inc. (EVR), and the stock will trade on the Nasdaq under the ticker “BCEL.”
No. 3: Prevail Therapeutics (PRVL)
The biggest biotech IPO of the week by projected market cap is Prevail, a gene therapy firm working on treatments to target rare neurodegenerative illnesses like Parkinson’s and Gaucher disease. Founded just two years ago, the company has already amassed $129 million in funding across three rounds. Venture capitalists’ high level of interest likely influenced Prevail’s confidence in the public markets, which is why it’s set to have the largest public valuation of any medical deal this week.
Prevail is set for a $125 million offering by selling 7.353 million shares at a price range of $16 to $18, effectively giving the firm a midpoint market cap of $672 million. Wall Street titans Morgan Stanley (MS) and Bank of America Merrill Lynch are the deal’s top bookrunners. Shares of Prevail will trade on the Nasdaq under the ticker “PRVL.”
No. 2: Grocery Outlet Holdings (GO)
Grocery Outlet Holdings is the week’s largest traditional IPO. The discount grocer boasts over 300 independently operated grocery stores, all of which brought in sales of $2.3 billion from March 2018 to March 2019. According to a company statement, the locations offer a “flexible buying model allows us to offer quality, name-brand opportunistic products at prices generally 40% to 70% below those of conventional retailers.”
The company is expected to sell 17.2 million shares at a price range of $15 to $17 for a midpoint deal size of $275 million. At the midpoint, Grocery Outlet Holdings would have a $1.49 billion market cap. Morgan Stanley and Bank of America Merrill Lynch are also underwriting this deal. The stock will trade on the Nasdaq under the “GO” ticker.
No. 1: Slack Technologies (WORK)
The week’s biggest deal is Slack, which operates the popular workplace messenger app that many believe to be an e-mail disruptor. Slack is widely expected draw a lot of investor interest, particularly as several recent software IPOs – including Zoom Video Communications Inc. (ZM) and last week’s CrowdStrike Holdings Inc. (CRWD) – have outperformed recently. The firm was founded in 2009 and has booked more than $450 million in sales over the last year.
But the much larger point of interest is Slack’s choice to hit the markets as a direct listing. This is when a company’s existing investors and shareholders sell their shares directly to the public without diluting shares to create new ones and without spending millions in fees on underwriters. Slack is the second high-profile firm to opt for a direct listing after Spotify did it in April 2018. If Slack’s debut proves as successful as Spotify’s – which insiders saw as a success while public investors fared less well – then public opinion regarding the formerly unusual tactic may become favorable.
Slack is expected to launch 283.4 million shares for $26.82 each, culminating in a massive deal size of $7.6 billion and even bigger market cap of $16.1 billion. As with all direct listings, there are no underwriters leading the deal. Slack will debut on the New York Stock Exchange under the ticker “WORK.”