24/7 Wall St.

It’s late in June, and that means another annual wave of index reconstitutions by FTSE Russell. This is something that many investors already have made changes around, but what will stand out in 2019 is that many of the new “hot” initial public offerings from 2017, 2018 and 2019 are going to get their day in the sun.

The annual Russell US Index Reconstitution will conclude at the close of trading on Friday, June 28, and market capitalization, free float and other issues are considered for inclusion into the Russell 1000, 2000 and 3000 indexes. While the event may be more inside-baseball than retail investors think they should care about, the rebalancing actually affects more than $9 trillion in investor assets and may create increased volatility in some of the socks they own. That is because so many mutual funds, exchange-traded funds (ETFs) and other indexes are either benchmarked to or invested in products based on the Russell indexes. Some of the newer entrants also see some of their highest days of trading volume around inclusions, exclusions and weighting changes.

The recent slate of top IPOs has been too many to easily count as “hot or not,” but 24/7 Wall St. identified some of the post-IPO stocks that are being added to the Russell 1000 Index or to the 2000 or 3000 indexes. The FTSE Russell initial press release has indicated that yet again the growth portion of the market outshines the “Value & Utilities” and the energy sector is lagging. That’s good for hot-IPOs because of this: when was the last time you heard of a hot IPO being hot because it was a “value” stock?

Russell’s data showed that more than two-dozen post-IPOs are expected to join the Russell 2000 Index. 24/7 Wall St. scraped 10 of them to show how they have traded and included market cap data to show how they compare elsewhere.

Altice USA Inc. (NYSE: ATUS) has been public since June of 2017, and while its shares have not soared above the debut, they have recovered handily with a 34% gain in 2019. Trading near $23.50, its 52-week range is $14.49 to $25.15. The market cap is $20.2 billion.

Beyond Meat Inc. (NASDAQ: BYND) is already eligible for the Russell indexes. Fair warning: trading this meat-replacement stock off of an index call, analyst call, pundit call or anything of the like is solely up to you. Its shares recently priced at $25 per share in the IPO but never traded anywhere close to that, with a post-IPO range of $45.00 to $201.88. The shares were between $150 and $160 on Wednesday. Beyond Meat has a market cap of $8.9 billion.

Bloom Energy Corp. (NYSE: BE) priced its IPO at $15.00 in late July of 2018. It initially rose after opening very high, but the late-2018 sell-off in the market was brutal on the shares. It has a 52-week range of $8.88 to $38.00 and was last seen near $12.00. Bloom Energy has a market cap of $1.4 billion.

Dropbox Inc. (NASDAQ: DBX) debuted in March of 2019 at $21 per share. It rose initially, but investors have tempered their enthusiasm, as the 52-week range is $18.50 to $34.95, with a $24.50 current price. Dropbox’s market cap is $10.5 billion.

EverQuote Inc. (NASDAQ: EVER) was last seen trading up 4% at $12.61, but its 52-week range is $4.09 to $22.09. The online auto insurance marketplace runner’s IPO from June of 2018 was at $18, above the $15 to $17 range. Its market cap is $321.6 million.

Lyft Inc. (NASDAQ: LYFT) priced its IPO in late March of 2019 at $72 and ended up trading as high as $78.29 on the first day’s close. It then tanked as the economics of ride-hailing became more clear, but the shares have since recovered. Lyft was trading at $63.50, in a post-IPO range of $47.17 to $88.60, and it has a market cap of $18.5 billion.

MongoDB Inc. (NASDAQ: MDB) had seen shares surge and surge after earnings beats, but at $154 now it has backed off handily from the highs. Its 52-week range is $47.69 to $184.78, and the easy-to-use and affordable database platform operation saw its shares pop 30% in the $24 per share IPO from October of 2017. MongoDB has a market cap of $8.8 billion.

PagerDuty Inc. (NYSE: PD) was trading at $47.30, and it has a post-IPO trading range of $36.00 to $59.82. The on-call management platform priced its IPO in April of 2018 at $24 per share but hasn’t ever traded down close to the IPO price. It has a market cap of $3.7 billion.

Spotify Technology S.A. (NYSE: SPOT) was a direct-to-market IPO rather than the traditional model. It has been public since April of 2018, with a debut of close to $165 and a first day close of $149.01. Now its shares are closer to $144, in a 52-week range of $103.29 to $198.99. Spotify is eligible for inclusion in the Russell US Indexes as it meets the free float requirement. The online music streaming leader has a market cap of $26.9 billion.

Uber Technologies Inc. (NYSE: UBER) had to temper its IPO price due to Lyft’s debut and due to the market being spooked that profits may (or are likely to) never arrive any time soon. Uber was last seen trading near $43, and its 2019 IPO was at $45. It traded near $42 its first day. The ride-hailing leader has a market cap of $72.7 billion.

Catherine Yoshimoto, director of Product Management for FTSE Russell, recently talked up the opportunity for IPOs being included in the indexes:

For newly public companies, meeting requirements for inclusion in the Russell US Indexes is considered a very important step. Entering the Russell US Indexes means that a company is recognized by the leading US equity benchmarks followed by approximately $9 trillion in passive and actively managed investment assets. Congratulations to all the new companies, both large and small, expected to enter the Russell US Indexes at this year’s rebalance.

Some other big changes are happening within the primary Russell indexes in the June rebalances. According to the FTSE Russell website, Microsoft Corp. (NASDAQ: MSFT) is unseating Apple Inc. (NASDAQ: AAPL) as the top index stock, removing Apple’s number-one position held since 2012. Apple is also falling behind Amazon.com Inc. (NASDAQ: AMZN), which will make Apple the third highest stock by weighting in the main Russell indexes. Berkshire Hathaway Inc. (NYSE: BRK-A) is expected to shift from 13% Growth and 87% Value to 100% Value and leave the Russell 1000 Growth Index.

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