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2016 Tech IPOs Fall Back To Their First Day Closes

Editor’s Morning Note: With two new IPOs under our belt, it’s a great time to remind ourselves where we stand.

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Party until you realize that we may not see another 2016 tech IPO.

It’s a perfect Monday morning here in San Francisco, but it’s not on Wall Street. Technology’s latest two public companies are both having a tough day in the markets following their recent debut.

Blackline is off 0.74 percent, after a sharply positive first day, while Quantenna Communications is off at more than five percent. The two performances are linked to their individual first-day results. Blackline did well, while Quantenna fell from its debut sticker. So to see them perform as they are today is in-line, if still disappointing.

For a short riff on each, head here, and here, respectively.

Importantly, the offerings add to the total number of entrants on our “US-located, obviously-tech, 2016 IPO” list, bringing us up to a drab tally of eleven. Someone call in the ticker-tape parade.1

New Blood

Whenever we get new entrants to our matrix, we’re primed for an update.2 So here’s a small chart you know well by now. This time color-coded so that green is good, and red is bad.3

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Here’s what that says that you need to know: Only two companies in our list are currently trading above their first day close (or 18 percent).

This means a couple, very important things:

  1. Complaints that tech companies are underpricing their offerings, based on first-day results, are calling the ball a bit too early. In fact, it seems that tech IPOs are priced pretty damn well, as their more balanced market valuation is above their (often raised-range, and upper-end) IPO price and first-day close.
  2. That Acacia Communications remains an outlier, with Twilio taking second position behind it. No other company really comes close.

Only two companies in our list are currently trading below their IPO price, or 18 percent.

This is simpler: Only two firms have so mispriced their offerings that they are already underwater. Neither is a surprise, really, as Secureworks only managed a flat first day, and Quantenna actually lost about 300 basis points during its debut. So most of our IPOs are doing fine to-date.

2016 Tech IPOs are up an average of 51.34 percent from their IPO price, but just 2.37 percent from their first-day close.

  • However, those numbers are a bit inflated by Acacia Communication’s epic post-IPO run. If you discount Acacia, the numbers change to a 35 percent post-IPO bump on average, and a 10.52 percent average decline from first-day closes.
  • Deleting a front-runner to make the group look bad is classic bad faith, but here it can help us slightly better understand this year’s IPO middle class.

There have been some rumors of other tech IPOs that could come this year—PointClickCare comes to mind. However, a quick scan of our friends over at the NASDAQ is a bit of a dampener.

We’ll see what happens, but here’s what November currently looks like on the tech board:

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  1. Yes, that was awful.
  2. No firmware jokes, please.
  3. Your complaints were heard.

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© Mattermark 2017. Sources: Mattermark Research, Crunchbase, AngelList.
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