If you like hearing about all of the upcoming IPOs every week, you’ve come to the right
place. . And this is one of those weeks you won’t wanna miss. Today we’ll talk about
8 companies scheduled to go public headlined by Affirm, Poshmark and Petco. Plus I’ll
give you a couple of updates on the Roblox IPO or I guess I should say the Roblox direct
listing, and we’ll ALSO talk about the big SPAC merger news with SoFi on this week’s
edition of IPO This Week for the week of January 11th, 2021.
Welcome to the Healthy, Wealthy, and Wise channel and our weekly feature, IPO This Week
where we talk about all the companies going public for the upcoming seven days. As always,
I want to thank everyone in the community that comes back each and every week to stay
on top of all the IPOs; I can’t say enough how much I appreciate the support you give
me by watching the videos and by pushing that like button which really helps to let me know
that you enjoy this weekly show that keeps you aware of all the new companies coming
out as well as information on lockup period expirations. And for those of you here for
the first time, my name is Kevin. And if you’re into staying on top of all of the companies
hitting the market, this channel might just be what you’re looking for, so definitely
considering subscribing and turning on the notification bell, that way, you won’t miss
any videos as soon as they come out. We gotta full line up this week, so let’s
get started, keeping in mind that, 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. With that being said, first up, we have two
companies from China that I’ll give you some overviews on;
The first is one Kuke Music Holding, ticker KUKE, who plans to raise $55 million at a
$339 million market cap. The company licenses and streams Western classical music in China
as the market leader, and additionally is the second largest online classical music
subscription service provider in 2019. The company also provides music education solutions
primarily to kindergartens through free placement of its smart pianos and then collects revenue
from student subscriptions. The one thing I would say about the company is that they’re
not exactly heading into their IPO on a high note as Revenue has declined in both the Fiscal
Year 2019 and even more severely in the first 9 months of 2020 with the company attributing
some of this to effects from the pandemic. KUKE stock looks to be priced within a range
of $16 to $18. As of the time of this video, I haven’t been able to confirm the exact
date of the IPO, it could be as early as Monday or as late as Thursday. Which is probably
a good time to remind anyone new to the channel or to IPOs in general that information on
IPOs can be fluid, where pricing ranges and trading dates often change. So if you see
something that has changed since I filmed the video, please feel free to add any updates
in the comments and I will do that as well. And also, when looking at your screen, the
last column is the IPO date when the offering is actually priced. But then public trading
begins almost always the next day. Now to the second Chinese company which is
Qilian International Holding, ticker QLI, who plans to raise $30 million at a $210 million
market cap. Just as a quick overview, the company focuses on the development, manufacturing,
marketing, and sale of licorice products, oxy-tetra-cycline products, traditional Chinese
medicine derivatives, heparin, sausage casings, and fertilizers. According to Nasdaq.com,
the company is profitable but did see revenue decline in the fiscal year 2019.
Qilian’s IPO is expected on Monday with pricing anticipated to come within a range
of $5 to $7. Trading would then begin on Tuesday. Moving on, we have Driven Brands Holdings,
ticker DRVN. Driven is North America’s largest auto services company, which includes the
well-known Meineke brand of auto repair centers. The company plans to raise $703 million at
a $3.1 billion market cap from their IPO with the proceeds going to repay debt. The company’s
portfolio has more than 4,100 locations across 49 states in the US and 14 countries overall.
The company has had good revenue growth over the past couple of years, as well as being
something that isn’t all that common at the time of an IPO, and that is it’s profitable.
The biggest negative in the financials is the amount of debt that the company has, and
will have even after the IPO, even considering that the IPO proceeds will be used to help
pay it down; in September, that debt was at about the $2.1 billion level. We have Driven
Brands IPO set for the 14th with pricing expected to come within a range of $17 to $20. Trading
would then begin on Friday. Next up we have Racing game developer Motorsport
Games, ticker MSGM, who plans to raise $40 million at a $278 million market cap. Being
spun out of the Motorsport Network, the company is currently the official developer and publisher
of the NASCAR video game racing franchise. Motorsport Games develops and publishes multi-platform
racing video games that can be used on game consoles, personal computers, and mobile platforms.
Their NASCAR video games have sold over one million copies for game consoles and PCs.
And currently, they offer NASCAR Heat Mobile for iOS and Android, which has had approximately
five million installs to date, and they are in the process of developing two more NASCAR
mobile games with projected release dates set for this year. For fiscal year 2019 and
the nine months ended September 30, 2020, the company reports that substantially all
of their net revenue was generated from sales of their racing video games. Their rate of
revenue did grow faster in the first 9 months of 2020 like so many gaming companies have
reported, due to the stay at home conditions brought on by the pandemic. MotorSport Games
IPO is set for Tuesday with pricing expected to come within a range of $16 to $18 with
Trading then beginning on Wednesday. Before we get to the most well-known companies
on this week’s calendar, we have Playtika Holding next, and they actually have the biggest
deal on the table as they look to raise $1.6 billion at a $9.7 billion market cap.
The company is based in Israel and is a leading developer of mostly casino-based mobile games,
producing nine of the top 100 highest grossing games in the US. Their games are free-to-play,
and then Playtika primarily generates revenues through in-app purchases, including the sale
of virtual currency and items that can enhance their game experience. To a much lesser extent,
they generate some additional revenue through in-app advertising.
The company primarily grows its game portfolio through acquisitions versus developing their
own. Financially, Playtika is profitable with strong cash flow generation, though its two
top titles accounted for half of fiscal year 2019 revenue. They have steadily increased
their user base and paying users, and have retained them over long periods of time. In
fact, the company reports that approximately half of their revenues for the twelve months
ended September 30, 2020 came from users who downloaded or first played their games in
2016 or earlier. To support the notion of their games having staying power, for the
ones that they’ve operated for at least five years, they’ve increased revenues of
five of them at a compound annual growth rate of 15% or more. As for details of the company
going public, the Playtika IPO is set for Thursday with pricing expected to come within
a range of $22 to $24. Playtika stock would then start trading on Friday under the ticker
symbol PLTK. Now for the big three IPOs of the week, Affirm,
Petco, and Poshmark. As many of you know, IPO This Week is mostly about providing the
information and data on the companies going public and details of the IPO itself. For
the most part, I stay away from analysis on this show because of that purpose, but I often
have other videos where I do share my personal opinions and thoughts on some of the companies.
If you’re interested in hearing what I think about these 3 companies as an investment for
myself, I’ll link a video in the description that I made a couple of weeks ago for anyone
who hasn’t seen it. So let’s start off with Petco stock which
will be traded under the ticker WOOF. The company’s full name is actually Petco Health
and Wellness as they look to show they are more than a pet supply store as they continue
to enhance their service offerings. As they look to go public, the company plans to raise
$744 million at a $4.0 billion market cap. As stated in their registration statement,
in the 10 months ended October 31st, Petco’s net sales rose 9% over the same time a year
ago, a number that jumps to 16% when looking at the most recent quarter, the biggest increase
in a period of eight straight quarters of comparable sales growth for Petco. The company
is now looking to go above $5 billion in annual sales.
As far as a growing market opportunity, Petco states in their filing that the number of
households with pets was expected to increase by 4% this year alone, with that resulting
in $4 billion in new demand for pet care products. Of course they have competition out there,
from brick and mortar names like PetSmart to online entities like Chewy, but there are
also many other retail options for pet supplies and food. While Petco has seen growth from
a strategy of modernizing many of its almost 1500 brick and mortar stores and focusing
more on online sales, the company still has a pretty hefty amount of debt, in fact over
3 billion dollars. The purpose of the IPO will be to help pay down that debt, but there
will still be a lot of it left and that might turn investors away, particularly in a segment
where growth is slow and steady versus fast and explosive. Now one thing the company is
looking to do to increase revenue growth is to expand its full-service veterinary hospitals
across the country to provide expanded service coverage, and they’re doing this by integrating
these veterinary hospitals into their existing pet care centers.
The Petco IPO is set for Wednesday with pricing expected to come within a range of $14 to
$16. Trading would then begin for Petco stock on Thursday.
Next up we have the Poshmark IPO, where the stock will trade under the ticker POSH. The
Fashion e-commerce platform plans to raise $244 million at a $3.1 billion market cap.
For anyone not familiar to the company, Poshmark is a peer-to-peer Online fashion marketplace.
The company was founded in 2011 and says that its users spend an average of 27 minutes a
day on its marketplace. And as far as the number of users on the platform, as of September,
it had 31.7 million active users with 83% of them being female, of which 80% belonged
to either the millennial or Gen Z generations. Poshmark believes it’s set themselves up
to do well in three key trends that they see driving the future of retail by these younger
generations: one is the continuing shift to online shopping, two, the shift to buying
secondhand items, and three, the social aspect of fashion and shopping. And to the social
aspect, it considers itself a social marketplace where it uses features typically found on
social media sites, including “likes” and “comments” to foster engagement. Sounds
like a good time to think about hitting that like button for the video IF you haven't done
it ;-) The company said there were more than 56 million social interactions on the marketplace
each day in 2019, with social interactions per active user up 34% compared with 2018.
A lot of people call it an online thrift shop, which doesn’t sound as positive, but the
numbers counteract any type of negative connotation. As there is a growing demand for secondhand
apparel, gross merchandise value has grown 25% or more in six of the last seven quarters.
Currently, they make their money by charging a fee of 20% of the final price for sales
$15 and over, or a flat rate of $2.95 for sales under $15.
As for market opportunity, a recent Cowen & Company report cited on MarketWatch forecasts
that shoppers will spend 52% more on secondhand items over the next five years, with online
resale expected to grow from $7 billion in 2019 to $37 billion by 2025. Within that market,
Poshmark counts Amazon, eBay, Etsy, Facebook, Mercari, Shopify, T.J.Maxx, and Walmart as
competitors. This leads us to their financials, where Poshmark
is showing a profit for the 1st 9 months of 2020 after posting net losses of $14.5 million
in 2018 and $48.7 million in 2019. The company also reports it had $192.8 million in revenue
for the nine months ended in September, compared with $150.5 million in the same period a year
ago. The Poshmark IPO is set for Wednesday with
pricing expected to come within a range of $14 to $16. Public trading for Poshmark stock
would then begin on Thursday. Next we have the previously delayed, but now
back on Affirm IPO. As you might remember, Affirm postponed their IPO along with Roblox
in December. Now while Roblox decided to change course from a traditional IPO to a direct
listing, Affirm decided to move forward with a traditional IPO where they plan to raise
$873 million at a $10.6 billion market cap. So if you’ve followed Affirm, you know it’s
a company that is known by its ‘buy now, Pay later’ approach where, unlike a traditional
credit card, you don’t have to pay compounding interest that can significantly up the overall
cost of the purchase. What Affirm does is tell you at the point of sale how much you
will ultimately pay using simple interest. So when you’re ready to buy something, you
are told upfront what you will ultimately pay for it within a time frame that is agreed
upon, with no late fees, and again, no compounding interest. The company looks to disrupt the
traditional credit card industry with its approach. Their intention to do this should
not be surprising considering that Affirm was founded by Max Levchin, one of the co-founders
of PayPal, a company that was a disruptor itself when it first came out. And Paypal
had a lot of people early on like Elon Musk and Peter Thiel who have since moved on to
found or develop even more successful companies, so many investors might be looking at Levchin
to continue that PayPal legacy with Affirm stock.
Affirm's approach looks like it’s paying off in growth, because as of September 30,
2020, more than 6.2 million consumers have completed approximately 17.3 million transactions
with over 6,500 merchants on Affirm's platform. And as CelloCovers in the community has shared
with us in the comments, the company has a strong Net Promoter Score of over 80 which
measures the willingness of customers to recommend a company's products or services to others,
so this should be seen as a positive when considering the potential for existing user
revenue growth.
And to that point, financially, for the fiscal years ended June 30th for 2019 and 2020, their
total revenue had year-over-year growth of approximately 93% reaching $509.5 million
as of June 30th, 2020. Now from their filing, one potential concern is that 28% of their
fiscal year 2020 revenue had come from Peloton, so that’s a lot of concentration in one
customer which adds risk to the equation, but that was very likely partly due to the
huge sales Peloton was having as it benefitted from the pandemic, so we might expect that
percentage to come down. Although for the quarter ended September 30th, that number
actually further rose to 30%, so just something to be aware of. Now with new partnerships
with other retailers being created, such as Neiman Marcus being added in November, the
customer concentration issue will probably dissipate as time goes on.
The Affirm IPO is set for Wednesday with pricing expected to come within a range of $14 to
$16. Trading would then begin on Thursday with Affirm stock being available under the
ticker AFRM. So that’s your list of companies coming
out. Which ones are you interested in? Let us know in the comments.
Now we had a lot of big news last week, one being Roblox’s decision to change course
and go public with a direct listing instead of a traditional IPO in which I talked about
in another video. After that video, an updated filing came out and I’ll dedicate another
video on that soon, but a couple of things I’ll give you a heads up on. One, is that
they stated an unlisted date in February to go public, so right now we can expect them
to go public fairly soon. And two, there will be no lock up agreements going into the listing;
this is what’s commonly done with direct listings, although I know many of you have
watched Palantir’s direct listing come with these lock-ups, so you may have had questions
about it. I’ll have a lot more on the Roblox DPO on the channel, so definitely stay tuned.
Now today, I want to talk more about another big piece of news that dropped last week and
that was SoFi, a popular financial technology company making the decision to go public through
Social Capital’s IPOE SPAC. So if you’ve been interested in getting SoFi stock when
it comes out, you’ll now have a chance. For some background on SoFi first, they have
grown to become a one-stop shop for financial services. They were initially focused on,
and most commonly thought of, for its student loan servicing, but they have expanded their
offerings to include personal loan refinancing, mortgages, credit cards, insurance, investing
and deposit accounts. And reportedly, they now have more than 1.8 million members. SoFi’s
full suite of financial products claims to offer its members the efficiency and convenience
that only an integrated digital platform can provide and allows them to manage their financial
lives in one application, all easily accessible on their phone.
Last year, SoFi acquired Galileo, which has approximately 50 million accounts on its platform
and allowed them to get deeper into the B2B market. SoFi’s consumer and enterprise businesses
are considered to be highly complementary, enabling SoFi to provide faster service to
both SoFi members and the customers of Galileo’s clients. They have experienced rapid acceleration
with this strategy and have achieved six consecutive quarters of year-over-year member growth.
From a Businesswire release, the company has delivered over $200 million in total net revenue
in the third quarter of 2020 and is on track to generate approximately $1 billion of estimated
adjusted net revenue in 2021, representing year-over-year growth of approximately 60
percent, and full-year adjusted EBITDA profitability. On top of all of this, SoFi received preliminary,
conditional approval for a national bank charter in October 2020. If SoFi obtains final regulatory
approval to own a bank, it would have a lower cost of funds to further support SoFi’s
growth. Now to the SPAC itself, it’s another one
founded by a venture capitalist Chamath Palihapitiya, who has taken Virgin Galactic Holdings ,Opendoor
Labs and Clover Health public through the SPAC route successfully over the past couple
of years. The deal values SoFi at $8.65 billion, which
was valued last May at $5.7 billion. When making the decision to target Sofi, IPOE felt
the company was strategically set-up to meet the needs of mobile-first consumers and lower
the cost of banking through technology. There is also a concurrent $370 million investment
from T. Rowe Price that you might find interesting. The transaction of the deal is expected to
close sometime by the end of the first quarter. I know between the interest in SoFi going
public and the success of the SPAC’s founder, there’ll be a lot of investors looking to
get in here. It’s probably noticeable that I focus more on traditional IPOs on the channel,
but because of past interest in a SoFi IPO by some of you in the community, I’ll plan
to talk more about them in future videos as more information becomes available.
Alright…so let’s move on to lock up expirations. If you wonder why we cover them and haven’t
seen the video I put out last week that talks about what they are and gives some examples
of some popular companies that recently have had them, I’d definitely check it out, as
the information might help you in enhancing your own IPO investing strategy.
For this week, we have GoHealth (GOCO) and nCino (NCNO) on the 11th. And then Trean Insurance
Group (TIG) and Relay Therapeutics (RLAY) on the 12th. And lastly, I have ALX Oncology
(ALXO) on the 13th. Okay, so there you have it, another episode
of IPO This Week in the books. Again, if you enjoyed the video and want to see more videos
like this, please like it, comment on it, and share with your friends and on any of
your social media sites. And speaking of social media, I just made the leap to Instagram last
week, so definitely add me there. 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 little 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!