📮The Sunday Newsletter archive

Best & worst performing IPOs so far this year

IPOs are still on vacation.🌴 There were no listings this week and next week will be no different. Hopefully, the new IPO season will start soon; until then, let’s take a look at the best and the worst-performing debuts we’ve discussed so far this year. Today we’ll talk about the 3 best and the 3 worst-performing listings and explain what happened in each one of them; you’ll be surprised by some of the names, let’s see.

-3. Good for the environment, bad for investors
Smartphone with the Poshmark app.

The worst-performing IPO we’ve discussed this year is the second-hand retailer Poshmark ($POSH). Its performance is horrible, down 74% from the first day of trading. There are 2 main reasons behind this poor performance.

As we had said in the Sunday Newsletter before its debut, POSH was extremely overvalued from the very beginning. Its IPO was priced at a 260% premium compared to eBay’s ($EBAY) valuation, despite the fact that the two companies are growing at nearly the same rate. And shares surged 140% in debut so valuation got completely out of hand. The company is also affected by Apple’s privacy changes ($AAPL) in iOS 14. Shares tumbled more than 20% last week after Q2 earnings. And the reason was the company’s marketing campaigns don’t translate into high revenue growth as ad efficiency has fallen on Apple devices.

In other words, POSH is probably the worst IPO in 2021 because it was valued at bubblicious levels 🎈 that fundamentals couldn’t justify.

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-2. Businesses love in-person events
Business meeting

ON24 ($ONTF) is a webinar marketing platform. Companies can host AI-powered webinars and analyze real-time behavioral data, targeting prospects with personalized offers. ON24 was an important marketing tool for many companies during the pandemic; revenue jumped 76% in 2020.

But now businesses are returning back to in-person events — even though they’re less efficient than the AI targeting methods — and ON24’s growth has stalled. Shares have fallen 70% since the first day of trading because the company was priced as a high-growth software firm. Yet it has failed to sustain its high growth rates in the post-pandemic world; it expects revenue growth of just 14.2% y/y for the next quarter.

But business leaders are justified in going back to in-person events; after a year of endless virtual events, even Zoom ($ZM) CEO was tired of them.🥱

-1. Investors’ nightmare

The Uber ($UBER) of China, Didi Chuxing ($DIDI) has been a nightmare for investors so far; its shares have fallen 47% in less than two months. Why so much pessimism? Well, first of all, shares of its US counterpart Uber are still underwater, two and half years after debut, so the sentiment was negative around DIDI’s listing. Its IPO was priced at the bottom of the range and the stock tumbled 25% in debut. But this was just the beginning. A few days after the IPO its app was removed from Chinese app stores and Chinese regulators visited the company for a cybersecurity probe.

DIDI had big plans for its future. It wanted to become a lot more than just the Uber of China. Yet it seems unlikely to be able to turn its plans into reality in a hostile regulatory environment.

Well, enough with negativity, let’s look at the three best-performing 💯 listings we’ve discussed in past issues.

🥉 Buy when there’s blood in the streets

Online visibility platform SEMrush ($SEMR) went public in March at a very bad time for the markets, as inflation fears had spooked investors. Its shares sank 20% in debut, even though they were reasonably priced. But SEMR rebounded quickly and is now up 93% from the first day of trading.

SEMR offers a platform that companies use to increase organic traffic to their sites using Search Engine Optimization tools. They can also manage their paid marketing campaigns and spy 🕵️‍♀️ on their competitors. Revenue increased 58% y/y in the most recent quarter.

🥈The cool online collaboration tool ($MNDY) is a newly listed project management software firm. While there are dozens of solutions out there, Monday’s modern and fully customizable platform attracts small and mid-sized businesses that use it to manage their operations.

Its stock has risen 104% since its trading debut two months ago. This week alone, MNDY jumped 30% after strong Q2 earnings results. Monday is growing very fast, in the most recent quarter revenue increased 94% y/y, but investors were most excited about the signs of operating leverage. In Q2 the increase in marketing expenses slowed down while revenue growth picked up. That’s why shares soared this week.

🥇The Shopify effect
Shopping bag with the globe inside.

Shopify ($SHOP) partner Global-e Online ($GLBE) is probably the best performing IPO so far this year. Shares have rallied 184% since trading debut in May. Like its partner, Shopify, GLBE is firing on all cylinders. On Monday, the company reported Q2 earnings that showed revenue growth of 92% y/y.

GLBE helps global online stores offer localized shopping experiences such as local payments and shipping solutions. It also offers local market know-how and other services that make them more competitive. Shopify is an investor in GLBE which is the exclusive provider of cross borders e-commerce services for Shopify merchants.

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