The flood of initial public offerings is expected to slow to a trickle this week, as the August lull sets in and issuers pull back ahead of the Labor Day holiday weekend.
But deal flow may also be reduced by cracks that are appearing in a key part of the IPO market, according to Kathleen Smith, Principal at Renaissance Capital, a provider of institutional research and IPO-themed ETFs.
“Tech stocks, and especially Chinese internet companies are starting to perform poorly, and that will not go unnoticed in the IPO market,” Smith told MarketWatch.
Pinduoduo Inc.
PDD, -7.13% the Chinese shopping app that is described as a combination of Facebook and Groupon, debuted to a strong start last week, with the stock gaining 40% Thursday on its first day of trade. But the stock fell about 6% on Friday and was down another 3.5% in early trade Monday.iQiyi Inc. IQ, -5.66% the Chinese answer to Netflix Inc. NFLX, -4.75% was down 4.8% while video streaming and game platform Bilibili Inc. BILI, -4.45% was off 3.9%, after it said a Chinese government “content inspection” had led to its app being temporarily removed by certain smartphone app stores in China.
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“Market returns are positive, overall returns are up an average of 22% in 2018, but they are starting to erode, said Smith. “That’s making investors hesitant.”
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Renaissance Capital is expecting a total of eight deals to price in August between this week and next week, up from 5 deals in August of 2017 and 7 deals in August of 2016.
That’s after 20 deals priced in July and 28 in June. There has been a total of 125 IPOs in 2018 so far, up about 44% from the same period last year.
The IPO of real estate services firm Cushman and Wakefield is the biggest deal on tap this week. The company is expecting to raise about $765 million by selling 45 million shares at the midpoint of its $16 to $18 price range. The company is planning to list on the New York Stock Exchange, under the ticker symbol “CWK.”
See: Cushman & Wakefield’s IPO: Here are 5 things to know
Then there is Sonos SONO, +0.00% a maker of high-end speakers that respond to voice commands. That company is expected to raise about $250 million by selling 13.9 million shares at the midpoint of its price range of $17 to $19. Sonos shares will trade on Nasdaq, under the ticker symbol “SONO.”
Don’t miss: Sonos IPO: 5 things to know about the maker of high-end speakers
Also in the Internet of Things space is Arlo Technologies Inc. ARLO, +0.00% a maker of home-security cameras that can be accessed remotely. Arlo is expected to offer 10.2 million shares priced at $18 to $20, raising $194 million at the midpoint of that range. Like Sonos, Arlo’s technology is compatible with Amazon.com Inc.'s AMZN, -1.63% Alexa and Alphabet Inc.’s GOOGL, -1.64% GOOG, -1.43% Google Assistant. And like Sonos, those companies might be viewed as direct competitors. The company is listing on the NYSE under the ticker symbol “ARLO.”
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The list is rounded out by Vaccinex Inc. VCNX, +0.00% a biotech that specializes in targeted biotherapeutics to trade serious diseases and ones with unmet needs including cancer, neurodegenerative diseases and autoimmune disorders. The company’s key product candidate is VX15, for the treatment of non-small cell lung cancer, or NSCLC, osteosarcoma, melanoma and Huntington’s disease. The product is based on the company’s SEMA4D an extracellular signaling molecule, that regulates the migration of immune and inflammatory cells to sites of injury, cancer or infection.
Vaccinex is planning to offer 3.33 million shares priced at $12 to $15 a pop. The company would raise about $45 million at the midpoint of that range. Shares will list on Nasdaq under the ticker symbol “VCNX.”
Blank-check company Tottehnam Acquisition Ltd. TOTAU, +0.00% is expected to raise $40 million in a deal that will see its shares trade on Nasdaq, under the ticker symbol “TOTAU.”
And BioNano Genomics Inc. BNGO, +0.00% is expected to raise about $30 million. That company is a life sciences instrumentation company in the genome analysis sector. Shares will list on Nasdaq under the ticker symbol “BNGO.”
Regional airline Mesa Air Group MESA, +0.00% is expected to price its IPO next week. Earlier Monday, Mesa said it would offer 10.7 million shares priced at $14 to $16, raising $160 million at the midpoint. The stock will trade on Nasdaq, under the ticker symbol “MESA.”
The Renaissance IPO ETF IPO, -3.73% was down 3% Monday, but has gained about 6% in 2016, while the S&P 500 SPX, -0.54% has gained about 5% and the Dow Jones Industrial Average DJIA, -0.41% has gained 3%.
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