Best IPOs in Q1 2018

March 29, 2018 by Paul Ausick

While the first quarter of 2018 saw just 43 U.S. initial public offerings (IPOs), the dollar amount raised during the quarter was the highest in more than three years. The 43 IPOs raised a total of $15.6 billion and included more deals valued at $1 billion or more than in all of last year.

Of the quarter’s 10 largest IPOs, seven occurred in January and three in March, with the final one to begin trading this morning. By sector, health care launched the most IPOs (13), but the 10 tech sector IPOs raised far more capital, $6.2 billion, compared to health care’s $1 billion.

Between the offering date and Wednesday’s closing price, the tech sector posted the highest average IPO return, 26.7%, well ahead of the 12.6% return on health care IPOs, the 5.8% return on utilities offerings and 5.4% return on financial sector IPOs. Nearly 42% of first quarter IPOs traded above their issue price as of last night’s close.

The data were reported Thursday morning by IPO ETF manager Renaissance Capital.

Here’s Renaissance Capital’s list of the first quarter’s 10 largest IPOs ranked by deal size. We’ve also included the stock’s first-day pop and its return as of Wednesday’s closing bell.

  1. PagSeguro Digital Ltd. (NYSE: PAGS): $2.27 billion; first-day pop of 35.8%; return of 72.6%
  2. iQIYI Inc. (NASDAQ: IQ) (NASDAQ: IQ): $2.25 billion; issued Thursday at $18 per share
  3. ADT Inc. (NYSE: ADT): $1.47 billion; negative 11.5% pop; down 45.7% from issue date
  4. VICI Properties Inc. (NYSE: VICI): $1.21 billion; pop of 4.5%; down 8.7% from issue date
  5. Dropbox Inc. (NASDAQ: DBX): $756 million; pop of 35.6%; return of 16.4%
  6. Hudson Ltd. (NYSE: HUD): $749 million; negative 7.4% pop; return of 47.5% from issue date
  7. Gates Industrial Corp. PLC (NYSE: GTES): $732 million; negative 2.6% pop; down 20.1% from issue date
  8. AmeriCold Realty Trust (NYSE: COLD): $725 million; pop of 11.1%; down 10.4% from issue date
  9. Corporación América Airports S.A. (NYSE: CAAP): $486 million; negative 3.5% pop; down 29.8% from issue date
  10. Bilibili Inc. (NASDAQ: BILI): $483 million; negative 2.3% pop; down 2.3% from issue date

Based on return since the date of the IPO, the two leading performers are both health care stocks: Menlo Therapeutics Inc. (NASDAQ: MNLO), up 122.5% after a first-day pop of 68.9%, and ARMO BioSciences Inc. (NASDAQ: ARMO), up 118.6% after a first-day pop of 74.9%. Two of the largest IPOs, PagSeguro and Dropbox, were the third- and fifth-ranked IPOs, respectively based on return to date.

Three of the largest IPOs in the quarter were listed among the 10 worst performing stocks since their date of issue: ADT (ranked second), Hudson (fifth) and Gates (10th). Solid Biosciences Inc. (NASDAQ: SLDB) was the worst performer among all first-quarter IPOs with a drop of 44% from the issue price.

Looking ahead to the second quarter, Renaissance Capital notes 62 companies in the IPO pipeline looking to raise $14 billion. Next week will see a direct stock offering from Spotify, the Sweden-based streaming music service, and the IPO should be one of the quarter’s biggest. Other large IPOs include AXA Equitable Holdings, the U.S. arm of France’s giant insurer AXA, which is seeking $3 billion and Vrio, the AT&T Inc. (NYSE: T) subsidiary that provides satellite TV to customers in Brazil, Argentina and Colombia, is seeking $1.5 billion.

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