| Includes: BOX, DLTH, ETSY, FDC, GDDY, MTCH, RACE, SHAK, SQ, TEAM
Summary
2015 has not been the most inviting for IPOs.
IPO raised proceeds in 2015 were their lowest in more than 6 years.
I have outlined a quick recap of 10 notable IPOs from 2015.
2015 hasn't been a mixed year for many IPOs. Some companies came in priced below expectations and others came in higher. Some surged their opening day and others flopped. But many big companies that had IPOs planned for 2015 stepped back and postponed hoping for a more stable and inviting market in the future. The following is a quick recap of 10 IPOs of 2015.
First Data (NYSE:FDC)
Although First Data is swimming in debt, they remain the world's largest payment processor and are, in my opinion, an integral part of the evolving payment processing industry. I believe First Data is a stock worth taking note of. They have a battle ahead of them trying to dig themselves out of debt while also trying to fight stagnant revenue growth, but they have a great global footprint and a solid operating margin. I think 2016 will be a brighter year for this stock.
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Source: YCharts
Square (NYSE:SQ)
The more techy payment processor also ended up in a struggle to raise the funds they had hoped for. Square ended up pricing their IPO at $9 per share; a $2.9 billion valuation. The stock soared past $13 per share on its opening day, but gravity has started to catch up to it.
Square is nowhere near turning a profit. There is a lot of reasons to question their strategy, margins, and competitive edge in a changing industry. Given the high level of risk associated with Square, I'm not confident throwing money at it. If they don't create some positive financial separation from their competitors, I can see this one going back down to $9 per share in 2016.
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Source: YCharts
Match (NASDAQ:MTCH)
Match is one of those IPOs that actually has some pretty good fundamentals. They are trading at a PE below 20 and shown strong growth in recent history. I think the volatile markets may have gotten the better of the Match IPO, and I believe 2016 will be a brighter year for the company.
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Source: YCharts
Shake Shack (NYSE:SHAK)
Talk about a roller coaster IPO, Shake Shack shot up opening day more than doubling its IPO price. And it didn't stop there for the hamburger chain, more than doubling again not even 4 months later. Eventually reality struck and the stock has been on a downward spiral since.
Shake Shack came on strong and then faded out when it hit the market, but that doesn't mean 2016 can't be a hit for the stock. There is still plenty of growth opportunity for the company as well as risk.
(click to enlarge)
Source: YCharts
Atlassian (NASDAQ:TEAM)
The Australian software company Atlassian hit the market at a high valuation just this month and has grown from it since. The company creates products that help improve productivity amongst corporate teams.
This company is sitting at a high valuation using your standard valuation multiples; earnings, sales, book value, etc. However, 2016 will be an interesting year for Atlassian to see if they can begin to grow into the valuation and live up to the expectations.
(click to enlarge)
Source: YCharts
Duluth Holdings (NASDAQ:DLTH)
If you've seen a surge in obscure clothing commercials from a company you are not familiar with, it may be Duluth Holdings. The clothing company takes pride in their high quality products and apparently customers are willing to pay for it. The combination of their marketing and products have been a hit with consumers and driven big growth in the company's sales.
Keep an eye on Duluth's revenue growth for 2016. Their model has proven profitable and scalable, so if they can continue with mid-range double digit year over year growth, then expect their stock to climb.
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Source: YCharts
Ferrari (NYSE:RACE)
Ferrari raced to a higher valuation than I had anticipated at their IPO debut, however the market has come around and eased off the valuation a bit.
I didn't buy in to the glitz and glam of this IPO. With a current market cap of $8.8 billion, I still feel the company is overpriced. I'm expecting Ferrari to hit as low as a $7.5 billion valuation for 2016. The luxury manufacturer operates at fantastic margins, however I believe future growth can be complex and risky when entering new foreign markets. With a PE over 2.2 times the industry average, I'm predicting 2016 will be a shaky year for their stock price.
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Source: YCharts
Etsy (NASDAQ:ETSY)
Etsy came to the market soaring up 88% on its IPO debut just to crash and burn thereafter. The company has been on a downward spiral following their IPO.
This is not a dot com business I am interested in. Negative margins with debt on the books that might continue to grow in the future can keep this stock tumbling. Although some might think it's trading at a discount, 3.3 times sales is still a little too high for me to get excited about this one.
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Source: YCharts
GoDaddy (NYSE:GDDY)
Priced at $20 per share, GoDaddy has had an impressive run on the secondary market reaching over $33 and currently on a nice run.
Even with negative margins and a large sum of debt sitting on their books, investors were still attracted to the strong growth rate GoDaddy has been experiencing. Investors' patience and risk will likely be tested in 2016 if GoDaddy shows no future in turning in the green to relieve themselves of the heavy burden of debt.
(click to enlarge)
Source: YCharts
Box (NYSE:BOX)
Box is another one of those companies that has performed poorly following their IPO debut. They came out of the gate strong as they were priced at $14 per share and closed at $23.23 their opening day of trading. However, the stock has sunk back down to its original pricing.
It will be interesting to see how much ground this stock will gain or lose in 2016. The company has experienced strong growth doubling revenue YOY but still produces a negative operating margin of -70.4%. And with competitors likes Dropbox and Microsoft (NASDAQ:MSFT), 2016 will be an interesting year for cloud based storage companies.
Final Notes
Yes, I have left out many IPOs from 2015 and I apologize for that. However, with 169 deals (which is 106 less than the year prior), it would be difficult to touch upon them all. Many of these are IPOs I wrote about prior to their debut or caught my interest following their offering. In conclusion, 2015 has not been a very warm year for IPOs. Too much uncertainty and volatility made for a roller coaster ride for investors. Hopefully companies gain some confidence in the markets and bring us some more big IPOs in 2016.
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