The calm before the storm continues! We’ll look at this week’s IPO and SPAC activity
including news on who starts trading this week, what big merger was announced, and upcoming
lockup and quiet period expiration dates. And since that activity is limited during
this shortened holiday week, we'll take a peek into some of most highly anticipated
IPOs coming this fall. Welcome to IPO This Week for the week of September 7th, 2020.
Welcome to IPO This Week where each and every week, we talk about all the companies going
public, the latest SPACs hitting the market, and all the lockup and notable quiet period
expirations. My name is Kevin and I want to thank you for checking in again for this week’s
episode. For those of you in the US, I hope you all had a great Labor Day weekend and
enjoyed a little break from the markets after some craziness at the end of last week. As
we are rolling into a busy IPO season, besides for our normal coverage, I thought today we
could talk a little bit about three of the most intriguing companies out there in the
pipeline and let you know where things stand as of this recording. Oh, and you know the
names: AirBnb, Snowflake, and Palantir. Let me know in the comments which of these three
companies you’re most interested in…you never know, you might get an extra video on
the one that has the most votes. Upfront, just a quick reminder that I’m
not a financial advisor and while this video is meant to be informative, it should not
be seen as a recommendation for you to take any action on the companies covered—you
should always do your own research or consult with your own financial advisor when making
any investment decision. And with that out of the way, let’s get
to our normal business first and talk about the new IPOs and SPACs coming out this week.
Like last week, we’re limited as of right now, we only have one confirmed SPAC coming
to market this week and that is Industrial Tech Acquisitions, ticker ITACU, a blank check
company out of Houston, Texas who plans to raise $75 million to acquire an industrial
or energy focused technology business with an enterprise value in the range of 250 to
500 million dollars with pricing set at the standard $10. According to information posted
on Nasdaq.com, the company increased its deal size by 25% last month. This SPAC’s management
team is led by venture capitalist Scott Crist, who serves as CEO of intelligent video monitoring
firm Osperity and is also a Partner at Texas Ventures. We'll keep an eye on this one and
we'll see who they eventually announce as their target when that time comes.
If any other companies are added to this week’s calendar, I’ll definitely post an update
for you. As many of you know, much of the information with IPOs is fluid so I try to
post any updates from the video in the comments as I have them.
We do have a significant merger to talk about; near the end of last week, Kensington Capital
Acquisition, ticker: KCAC, announced an agreement with next generation battery developer QuantumScape
for a merger, which will result in QuantumScape raising 700 million dollars and becoming a
publicly listed company. QuantumScape has been exclusively focused on developing solid-state
batteries and designing a scalable manufacturing process to commercialize its battery technology
for the automotive industry. QuantumScape believes the proceeds from this transaction
will fully fund the company through the start of production of its joint venture with Volkswagen.
Current QuantumScape board member JB Straubel who was a former Tesla Chief Technology Officer
stated that, "QuantumScape's solid-state anode-less design represents the most elegant architecture
I've seen for a lithium-based battery system, and the company has an opportunity to redefine
the battery landscape." Wall Street reacted positively to the announcement with the SPAC’s
stock jumping from $10 to $22.50 at the end of last week.
As far as upcoming lock-up expirations, we have only have biotech Imara, symbol IMRA,
a biopharmaceutical company that develops and commercializes therapeutics for patients
with rare genetic disorders of hemoglobin, such as sickle cell diseases; their lockup
ends on Tuesday, Sept. 8th. And then we also have a few notable quiet periods ending on
Tuesday as well, and those include KE Holdings (BEKE), NetSTREIT, (NTST), Duck Creek Technologies,
(DCT), and CureVac (CVAC), all companies we’ve discussed here in the past; if you’re interested,
you can catch up with each one of them in the playlist I’ll link for you.
So let’s now start looking forward to what we know and what we’re expecting in the
near future for some of the biggest names in the IPO pipeline set to debut before the
end of the year. The first one is one that I covered in two
videos last week, and that’s Palantir which will be direct listed under the ticker PLTR.
I’m not going to repeat everything from those 2 videos, but I have created a playlist
for Palantir which I’ll link for you if you haven’t seen them plus I’ll be making
more videos on the company as it readies to go public and then add them to the playlist
as well. One of the things I do want to remind you is that on Wednesday of this week, the
big data analytics company will have an investor day livestream that potential investors are
welcome to attend. The details on how to attend it is in the shorter of the two videos that
I made. The other thing that I want to let you know with Palantir today is that they
have amended or updated their S-1 filing, which of course they did right after my last
video…this is becoming a pretty frequent occurrence with them. So I’m sure after
I finished this video, they’ll put something else out just drive me crazy. Anyway, within
the amended filing, there was clarification on how the company would be governed which
was something we were discussing in the comments over the weekend.
So the original filing spoke of a unique three-class voting structure where Palantir founders Alex
Karp, Stephen Cohen and Peter Thiel will be given a special “Class F” share that will
ensure they hold 49.999999% of the ownership of the company in perpetuity —meaning that
even if they sell the underlying shares, they will still hold that percentage. Which sounds
pretty odd, doesn’t it? Well, because of that, the SEC probably pushed back resulting
in the amended filing. There’s a couple of good articles out there on this if you’re
interested, I’m going to reference one from Danny Crichton at TechCrunch, where I’ll
link in the description. In the amended filing, a new risk factor was added to address this,
which states: Although we currently are not considered to be a “controlled company”
under the New York Stock Exchange corporate governance rules, we may in the future become
a controlled company due to the concentration of voting power among our Founders and their
affiliates. So in case you don’t know, a “controlled
company” based on New York Stock Exchange corporate governance rules is a company of
which more than 50% of the voting power is held by an individual, group, or another company.
Now at first glance, the filing states that the founders will own 49.999999% so technically
it seems that they are right below the threshold. However, that’s only when accounting for
those special Class F shares, as they will almost certainly have over 50% when you account
for any other classes of shares they will own. In other words, public shareholders in
the company will likely legally have zero input into the governance of the company.
The key line in the filing is “If we were a controlled company, we would be eligible
to and could elect not to comply with certain of the New York Stock Exchange corporate governance
standards.” Based on this, the author of the article states that “Given the diminished
voting power of employee and investor shares, it is possible that these voting provisions
will negatively impact the final price of those shares.” So I wanted you to be aware
of the updates with Palantir, and again, the article is a good read it you want to check
it out. I'll be monitoring and clarifying information as it comes out, plus I have every
intention to put out a thorough video on the company closer, but before, it starts trading
and I’ll share my personal thoughts on all of the nuances of the company and their direct
listing…so stay tuned for that. Next up, let’s talk a little bit about AirBnB.
If there’s one company out there with the name-brand that the general public is expecting
to go public very soon and would generate a lot of interest from retail investors, that
would be AirBnB. Other than mentioning that the company is looking to go public, we have
yet to talk about it here. And while there is a lot of videos and articles to check out,
the reason I haven’t talked about it yet is because, as of right now…and really hoping
this doesn’t change until the video is released!...the company has only filed a confidential draft
registration statement on August 19th so there is no public filing available to review where
we can talk about the offering and what financials the company is reporting. So most of what’s
out there is based on anticipation, not facts or statements from any filing. But there was
an interesting interview on Bloomberg TV that I thought was interesting to share and it
was with Pershing Square’s Bill Ackman, where he had shared that he had preliminary
discussions to take the company public via the SPAC route. In the interview, he stressed
that the talks were very preliminary where they didn’t get to dive into the company
financials. According to him, AirBnb hasn’t ruled out the SPAC route, but he feels the
company would prefer to go public through the traditional IPO route versus going with
a SPAC. So it’s interesting, because for the viewers that follow SPACs, you know that
Pershing Square was the largest SPAC ever and they have 5 billion dollars to work with.
So to me, it’s interesting to hear that AirBnB has looked into SPACs and the certainty
of the dollars it would bring as it also looks to go to underwriting banks and see it what
it could raise there, knowing that their business took a hit during the pandemic and the concerns
of more market volatility…so they're definitely doing their due diligence. Personally, I am
so looking forward to seeing an S-1 filing and being able to really examine the financials
and see how well they have actually weathered the pandemic storm. While their business was
grounded to a halt earlier in the year, there is growing evidence people are booking again,
albeit more in closer destinations, or ones that are within driving distance and I would
love to see the actual data they have on that. Needless to say, when I have concrete information
to share with you on the company, I’ll share it with you so definitely have your notification
bell turned on. And the last of the big 3 upcoming IPOs we’ll
talk about today is Snowflake, who will trade under the ticker SNOW. I made an introduction
video to the cloud data warehousing company a couple of weeks ago when their IPO filing
was announced; if you haven’t seen it yet, I’ll link it in the description for you.
If there has been one company more of my viewers have asked about than any others, it’s been
Snowflake. And there had been a lot of interest for some time as this company has raised a
lot of capital, in fact around 1 and a half billion dollars in venture financing. And
to further add to its appeal, last December, the company landed Frank Slootman as CEO.
For those of you who may not have heard of him, Slootman was previously Chairman of ServiceNow
and is well regarded in the industry for making money on taking private companies public.
Before ServiceNow, he was successful in taking Data Domain public in 2007 before selling
it for big money 2 years later. While Snowflake is not profitable, it is growing
fast; for the fiscal years ended January 31 for both 2019 and 2020, their revenue had
year-over-year growth of 174%. And for an industry, the data warehouse as a service
market is predicted to grow at a 29.2% compound annual rate through 2030…so there should
be a lot more growth to come. In fact, according to Bloomberg Intelligence that’s because
“only 30% of data analytics is now performed in the cloud, putting Snowflake in a great
position to take share from the legacy on-premise vendors.” The company has a lot of big name
customers in a variety of industries; some of them include Capital One, Experian, Bankrate,
Sony, Office Depot, DoorDash, Instacart, Adobe, DocuSign, Micron and Dropbox.
Now, on the flip side, they do have some big time and equally big name competition with
Amazon’s AWS, Microsoft’s Azure and Google Cloud. Where Slootman sees those companies
as operating the infrastructure cloud, he has been quoted as saying that Snowflake wants
to be the leader of what he calls the "data cloud — a platform that governs and secures
private data and can manage rapidly growing workloads". So think about that for a second
and you start to realize that, from the infrastructure point of view, Snowflake actually is a customer
to those big name, deep pocket companies. And yet, Snowflake also competes with the
cloud data management services offered by those very same companies, including going
head-to-head against their cloud data warehouse services: AWS Redshift, Google Big Query and
Microsoft Synapse. So it’s an interesting dynamic where Snowflake is a customer to its
competitors and because of that, is very dependent on the pricing terms it can get from them.
For Snowflake's sake, hopefully Amazon, Microsoft and Google continue to act more like partners
than as competitors. I feel like I could go on and on with Snowflake,
but I’m going to stop here and also remind you that I will be putting out a thorough
analysis video for this company as well as we get closer to the IPO. This is definitely
going to be an interesting time on the channel and I’m so glad to have you along with me.
I’ve had a lot of good comments and I’m loving the discussion with you guys. Which
reminds me, remember to let me know in the comments which of Palantir, Airbnb and Snowflake
you’re most interested in. So with that, please like the video if you
enjoyed it and share with your friends and also on any of your social media sites and
forums you’re on—the more exposure we get, the more we can grow the channel together
which'll allow me to justify putting more time towards it. And if you’re new to the
channel or just an occasional visitor, we’d love to have you join the community, it’s
totally free, you just gotta press that red subscribe button. And with that, I’ll wish
you a good week of trading….thank you for watching and, until next time, have a great
day!