2 Stars and 2 Flops: A Look Back at 4 Notable 2017 IPOs
2017 wasn't a particularly hot or cold year for initial public offerings on the stock market. According to data compiled by IPO specialist Renaissance Capital, 160 new share issues were priced, which is only slightly below the average of the years from 2010 to 2016.
As ever, some of these many issues were more high profile than others, due to numerous factors (size, existing brand recognition, etc.). With that in mind, here's a look back at four prominent issuers and how they've done since their market debuts.
One of the top names in online real estate, Redfin (NASDAQ: RDFN) has proven to be a popular stock since its July IPO.
What helped was the company's first earnings report as a publicly traded entity, in which it hit the upper end of its guidance -- revenue rose by 35% on a year-over-year basis (to almost $105 million), while net income tripled and then some to $4.3 million. The following quarter brought the company down to earth, however: it missed analyst estimates for revenue, and its headline net profit landed in the red.
Since then, however, investors have been returning to the stock, likely encouraged by a high-demand housing market that shows little sign of slowing down.
Redfin currently trades at $29.45 per share. That's almost double the stock's IPO price of $15.
Another IPO success story is Roku (NASDAQ: ROKU), the California-based maker of popular streaming TV devices -- the stock has risen by 280% from the $14 per share price set in advance of its September market debut.
In its first (and so far only) earnings report as a stock market entity, Roku blew past estimates, growing net revenue by 40% to almost $125 million with a net loss of nearly $9 million. Operational metrics -- active accounts, total hours streamed, and average revenue per user -- all headed sharply north.
There are a few caveats, however. Roku has almost always been unprofitable, and analysts are expecting full-year losses for both 2017 and 2018. Also, much of its usage comes through its Netlix and YouTube channels. Unfortunately, the company draws little revenue from those outlets.
But given the stock's heady price appreciation, it appears that investors are focusing on the positives for now.
Blue Apron Holdings
Hate making dinner? Fortunately for you, a host of prepared-meal delivery services have sprung up to make the process easier. Arguably the best-known one is Blue Apron Holdings (NYSE: APRN).
That hasn't made it a good performer on the market, however; since its June debut, the company's stock trades at less than half its IPO price of $10 per share.
A deepening loss is one factor concerning investors. Its Q3 bottom line was dipped in red sauce, to the tune of over $87 million, compared to the $37 million it lost in the same quarter of 2016. Net revenue did rise, but by only a modest 3% to almost $211 million.
The company's CEO stepped down in November. That juiced the shares somewhat, but some commentators -- my colleague Rich Duprey among them -- believe this won't solve the company's fundamental problem: its lack of a sufficient competitive moat.
On average, the analysts that track Blue Apron's stock are modeling bottom-line losses for this fiscal year and next.
After a rough few months, Snap (NYSE: SNAP) shares recently started to regain some lost ground. Still, the stock is currently trading a few dollars shy of the $17 per share price of its March IPO.
The company is basically a photo and video messaging service provider, but it aims to be more. It's broadening its menu of services, for example inking content deals with Big Media mainstays Time Warner and Comcast. It also dipped its toes into the hardware segment with Spectacles, its video-capturing goggles.
These projects haven't translated into profitability. The company remains very deep in the red -- by a scary $443 million in Q3 -- while revenue and user count haven't grown as much as expected. A recent redesign of its app won praise from many and helped lift the share price, but a cool new look is probably not going to suddenly turn things around.
Nevertheless, the stock has its believers. According to Yahoo! Finance, 11 of the 36 analysts covering Snap rate it a "buy" or a "strong buy".
Time to walk the walk
Stock performance aside, all four IPOs did what they were designed to do -- raise capital for their companies.
But this is only an initial step. A new stock market arrival still has to guide itself effectively as a publicly traded entity. As you can see with the four companies here, this ability can vary greatly.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Netflix. The Motley Fool recommends Comcast and Time Warner. The Motley Fool has a disclosure policy.