Today I’m talking about 11 companies scheduled to go public this week…2 of them by way
of a direct listing. And those 2 just happen to headline the week; their names: Asana and
Palantir. Let’s get settled in as we prepare to talk IPOs for the week of September 28th,
2020. Welcome to IPO This Week, where each and every
week, we talk about all the companies going public, as well as 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. As you may have noticed, last week was a little quiet on the
channel, but there was a reason for that, as my grandfather who I was very close with
passed away. I still was able to get last week’s episode out and I tried to answer
everyone’s comments last week as best I could, but if I missed anybody, I apologize.
Unfortunately, and I'm sure understandably, I was not able to get a second video out during
the week, but I’m looking to get back on track this week. And we do have a busy week,
as we have 9 traditional IPOs and the 2 direct listings of Asana and Palantir to talk about.
And there’s a lot of variety to these companies, including an international flair to many of
them, so I apologise in advance for any pronunciation issues. So let’s just jump right into it!
First up, we have a Danish, late stage rare disease biotech named Orphazyme , ticker ORPH.
The company’s candidate is in development for Niemann-Pick disease Type C, or NPC. NPC
is a rare progressive genetic disorder characterized by an inability of the body to transport cholesterol
and other fatty substances inside of cells. This then leads to the abnormal accumulation
of these substances within various tissues of the body, including brain tissue. The company
received FDA acceptance on a priority review basis and expects the FDA to complete its
review of the Phase 3 results for the treatment of NPC by March of 2021. The lead candidate
is also being studied for treatment of Amyotrophic lateral sclerosis or ALS, which commonly known
as Lou Gehrig’s Disease. As someone who has treated patients with ALS, I can tell
you it is a devastating disease as attacks the nerve cells responsible for controlling
voluntary muscle movement, like chewing, walking, and talking. The disease is progressive and
there is no cure, and usually what happens is that the muscles that control your breathing
fail leading to death. Just a nasty disease that usually attacks men more than women,
and often strikes between the ages of 40 and 60.
According to a 2019 market research report by Grand View Research, the larger global
market for ALS, is forecasted to reach $886 million by 2026. The company looks to price
its IPO on Monday at $13.13 with trading to begin on Tuesday.
Next up, we have the largest traditional IPO of the week, Chinese data center operator
Chindata Group Holdings, ticker CD, who plans to raise $500 million at a $4.5 billion market
cap. The company was founded to develop state of the art ‘hyperscale’ computing data
centers for organizations in China and greater Asia. As of June 30, 2020, the company had
9 data centers in service and another 6 data centers under construction with a footprint
covering China, Malaysia, and India. The company counts ByteDance as a customer which accounted
for 81.6% of its total revenue in the first half of 2020. Obviously, it’s important
for them to not lose ByteDance and the revenue they bring with them.
According to a 2020 market research report by ResearchAndMarkets, the Chinese market
for data center services was valued at an estimated $13 billion in 2019 and expected
to exceed $36 billion by 2025, representing a very strong compound annual
growth rate of 19.2%. The company has generated strong revenue growth and an increased profit
and gross margin. The company is looking to price between $11.50 and $13.50 and using
70% of the proceeds for development and construction of new data center projects.
The IPO is scheduled for Tuesday, the 29th with trading set for the next day.
Next we have Dubai-based company named Yalla Group, symbol, YALA.
Yalla is the largest voice-centric social networking and entertainment platform in the
Middle East and North Africa region. So when I say voice centric, I’m talking about something
like Voice Chat vs just typewritten text. The company also offers Online Games and Gift
exchange. Yalla’s app can be downloaded through Apple and Google’s platforms. Although
focused on the Middle East and Northern Africa, they still have to compete with the more internationally
well known names, such as Facebook, Tik Tok, and Twitter.
But even with that competition, Yalla had approximately 12.5 million monthly user visits
and 5.4 million paying users in the second quarter of 2020. The company has demonstrated
accelerating growth and profitability with strong free cash flow generation.
As of this recording, we expect the IPO on Tuesday with pricing set between $7 and $9
with trading to begin on Wednesday. Keeping up with the international theme so
far, we go back to China where we have Shangai-based pet-focused online retailer Boqii Holding,
ticker BQ. The company is the country's largest pet-focused
e-commerce platform and online community and counts approximately 23 million registered
users as of the end of last year. The company engages with potential users through shopping,
content, social media and offline events. Additionally, the site offers pet product
sellers online distribution through its online social networ, so the company is trying to
be much more innovative than a store that just sells pet-related products.
According to a 2019 market research report by Frost & Sullivan, the Chinese market for
pet products and services is estimated to grow at a multiple of 2.7 times by 2023.
Following a decline in revenue in its latest fiscal year, growth turned positive in the
most recent quarter although gross margin declined and operating loss widened. The company
is also using more cash in its operations. The company looks for its IPO on September
30th with trading to begin on Thursday. Next we have California based Mission Produce,
ticker AVO, a leading supplier of fresh avocados. Mission produces avocados on its own land
as well as sources avocados from third party growers in order to provide customers with
a year round supply. The company serves retail, wholesale, and foodservice customers in over
25 countries, and it has long-standing client relationships, with a majority of its top
10 customers for last year having been customers for over 20 years.
According to a 2020 market research report, the global market for avocados is expected
to grow from an estimated $14 billion in 2020 to $19 billion by 2027, a forecasted Compound
Annual Growth Rate of 4.8%. While the US leads in avocado consumption,
growth in China is expected at a higher rate of 7.4%. The company’s IPO is set for Wednesday
with pricing expected to come within a range of $15 to $17 with trading then beginning
on Thursday. Moving along, but staying in the state of
California, we have Pulmonx, with the cleverly selected ticker LUNG
set to go public this week with the company planning to raise $100 million at a $518 million
market cap. The company’s Zephyr Valve is a treatment
device for severe emphysema. Emphysema is a form of COPD or chronic obstructive pulmonary
disease, and accounts for approximately 25% of all COPD patients. The condition is a debilitating
and life-threatening disease that progressively destroys lung tissue, resulting in a diminishing
ability to breathe and engage in the most basic of daily activities, leading to a high
mortality rate. Pulmonx received pre-market approval for the
Zephyr Value in 2018 and is now commercially available in more than 25 countries,
delivering over 80,000 valves used to treat more than 20,000 patients through June 30,
2020. Management believes its current market size
is 500,000 patients in the U.S. and 700,000 additional patients in certain international
markets. As far as financials, the pandemic has negatively
impacted the company with revenue having contracted in the first half of this year compared to
the same time period in 2019. However, according to a 2019 market research report by GlobalData,
the market for COPD treatments is expected to grow from $9.9 billion in 2019
to $14.1 billion by 2025, a forecasted growth rate of 42%. The expected growth is attributed
to an increase in the number and efficacy of drug treatments as well as the aging of
the world's smoking population, with a growing incidence of disease.
The company, like many companies, needs to move past the struggles with the virus to
address the market opportunity and improve on its financials. Pulmonx is set for pricing
of its IPO on Wednesday expected to be in a range of $14-$16 with trading to begin on
Thursday. Let’s move onto Texas-based retailer Academy
Sports and Outdoors, ticker symbol, ASO. The company was founded in 1938 and is one of
the leading full-line sporting goods and outdoor recreation retailers in the US. The company
currently has 259 stores in 16 states located in the Southern part of the U.S.
The company also operates three distribution centers and sells online through its e-commerce
platform, which contributed 11% of the company's sales in the first half of 2020.
According to a 2016 market research report by Grand View Research, the global sports
equipment market was an estimated $66 billion in 2016
and is expected to grow at a compound annual growth rate of 3.5% through 2025.
Academy counts Dicks Sporting Goods, Bass Pro Shops, Walmart and Target as some of its
competitors. Recent financial performance shows growing
operating profit, operating margin and net income. And powered by 5.3 billion dollars
in sales over the 12 months ended August 1st, revenue rose 19% to $2.7 billion in the first
half of its current fiscal year. Academy’s IPO is anticipated for Thursday, October 1st
with pricing expected to come in between $15 and
$17. Trading will then begin on Friday. Up next, we have a Pennsylvania based Preclinical
oncology biotech named Immunome, ticker IMNM, who plans to raise $30 million at a $126 million
market cap. The company was founded to develop antibody
therapeutics with a primary focus on cancer treatments, however, in the year 2020, what
else would they do but also expand into developing antibodies for the virus behind the pandemic.
The company's lead candidate, IMM-ONC-01 is looking to treat a variety of cancers by
focusing on interleukin-38, a small protein which appears to function as a novel immune
checkpoint inhibitor. As to which types of cancers the treatment is for wasn’t clear.
The company expects to file an IND for their candidate in the second half of next year
upon successful completion of its preclinical evaluation. As I always mention, biotechs
at this stage don’t have any revenue and are, at best, years away of bringing anything
to market and Immunome is no exception. I haven’t nailed down an IPO date, but indications
are that it could be on October 1st with pricing to come within a range of 11 to 13 dollars
and begin to trade on Friday. Quickly back to China, we have education services
provider Lixiang Education, ticker LXEH who plans to raise $33 million at a market cap
of $133 million. I don’t have a lot for you on this one, but the company is one of
the 10 largest primary and secondary education providers in the Zhejiang Province with over
4,500 students enrolled. The company has revenues of 21.9 million dollars and net income of
6.8 in the most recent 12 month reporting period. They look to have their IPO this week
and that could come as soon as Tuesday with trading on Wednesday. Pricing is expected
to come in at between 9 and 11 dollars. So that’s the traditional IPOs for the week.
But the two biggest names aren’t coming to the market in the traditional way, instead
they’re going with a direct listing, meaning there are no underwriters and although recent
rules have changed on this, the companies aren’t looking to raise any capital with
new shares. Instead they will allow existing shareholders to now have the opportunity to
trade their shares on the public market. First up we have Palantir, ticker PLTR. Now,
if you’ve previously been on the channel, you know I’ve talked a lot about this company
so there’s not much new I can share at this point. I have a playlist of videos that I’ve
made on the company, and then just last night, I released a comprehensive video on the company
with almost 20 minutes of information on the background, the controversy, the financials,
the valuation, and also some of my own personal thoughts on Palantir. So if you’re interested
in the company, definitely check it out, I’ll link it in the description for you. For today,
I’ll give you an overview and the trading information. Palantir is a data analytics
company that was initially founded in 2003 to build software for US intelligence agencies
for counterintelligence purposes with their ultimate aim being to reduce terrorism while
attempting to preserve civil liberties. The company has been widely reported to have helped
the US in finding Osama bin Laden. The company has since expanded outside of the government
market and now offer their services to commercial customers such as Airbus and BP. They have
evolved their service offerings to just two platforms. The first is named, “Gotham”
and was constructed for analysts at defense and intelligence agencies for their government
customers. For their commercial customers, they have their second platform named “Foundry”
whose focus is to transform the ways in which organizations interact with information by
creating a central operating system for their data.
From a financial perspective, Palantir reported revenue of $742.5 million in 2019, up 25%
from the previous year; and that came alongside a net loss of $580 million. In the prior year,
its sales were $595.4 million with a net loss of also $580 million. The company makes a
lot of money from each of its customers, which is good because they only have 125 customers,
and of those 125, three of them account for almost a third of the total revenue, which
could become a problem if there were to lose one of those customers. While revenue has
been growing and the company is now estimating to bring in over 1 billion dollars in 2020,
it is worth remembering that the company has yet to turn a profit since its founding in
2003. To keep this video from being too long and
considering that many of you have seen my other videos, I won’t go into some of the
controversial aspects of the filling, but again, that is all covered in the video I
released yesterday. Palantir’s last amended filing had the company expected to begin trading
on Tuesday, but there are indications that it will instead begin trading on Wednesday.
I’ll keep everyone updated as I get further confirmation. As a reference point of where
the stock might trade at, based on recent highs of trading in the private markets, we’re
going to look for the stock to begin trading around $11.50.
Okay, and then last, but certainly not least, we have Asana who will trade under the ticker
ASAN. Asana is a work management platform that helps teams orchestrate work, from daily
tasks to cross-functional strategic initiatives. The company was established by Facebook co-founder
Dustin Moskovitz in 2008. Over 82,000 paying customers use Asana as of July 31st of this
year . The platform’s purpose is to add structure
to unstructured work, creating clarity, transparency, and accountability to everyone within an organization—individuals,
team leads, and executives—so they understand exactly who is doing what, by when.
According to the company, their system collects and structures institutional knowledge about
how past work was completed and provides a real-time plan and roadmap for current and
future initiatives. They call this their work graph. The work graph captures and associates
units of work—which includes tasks, projects, milestones, portfolios, and goals with the
people responsible for executing those units of work and then applies the processes in
which work gets done with rules and templates. Information about that work is available in
files, comments, status, and metadata. Asana has experienced strong growth in recent
reporting periods. Revenues were $76.8 million in fiscal year 2019 and almost doubling to
$142.6 million in fiscal year 2020. And there should be more growth to come as,
according to a 2019 market research report by MarketsAndMarkets, the global market for
enterprise collaboration was an estimated $31 billion in 2019
and is expected to reach $48.1 billion by 2024, representing a forecasted Compound Annual
Growth Rate of 9.2%. Competition in the market comes from companies
such as Slack and Microsoft. Now while revenue almost doubled, net losses
actually more than doubled with a loss of $50.9 million in 2019 growing to a loss of
$118.6 million in 2020. Much of that is a result of high operating
expenses in sales and marketing and research and development costs. Over the past 2 years,
quarterly gross margins have grown from 78% in April of 2018 to 87% in July of 2020.
The company looks to hit the public market on Wednesday, September 30th. Unlike Palantir
who has chosen to lock up approximately 80% of their shares, there are no lock up agreements
for Asana. This scenario could result in a lot of volatility in the price. Speaking of
the share price, being that there are no underwriters in a direct listing, there is no pricing range
set as you would expect to see with a traditional IPO. Based on recent trading of their stock
in the private markets, the low and high sales price per share of their stock during the
period from February 1, 2020 through August 31, 2020 was $13.04 and $28.00.
For some other numbers that might help you decide on a fair share price; Asana’s valuation
at its most recent private financing in 2018 was about $1.5 billion dollars.
But through this year, the company has been reported to be valued in the 5 billion range.
Of course, give that a bump because of it now becoming a public company, and you could
see it being traded at a valuation of a 6 to 7 billion dollar range or more, considering
how tech IPOs have performed on their first days of hitting the market.
So there you go, all the new companies expected to begin trading. Let me know which ones you’ll
be looking to possibly buy in the comments section. Before we wrap this episode up, let’s
take a look at companies with locked up shares expiring. For this week, we have two, WiMi
Hologram Cloud (WIMI) expiring on the 28th and Zentalis Pharmaceuticals (ZNTL) on the
29th. And then I’ll add a notable quiet period
ending for PainReform (PRFX) which happens on the 28th, so we’ll see what research
reports come out on them. So another long episode this month, if you
made it this far into the video, nice job for hanging in there with me! If you enjoy
hearing about all the companies going public each week, please remember to let me know
with either a comment or simply by pressing that like button. And if you’re new to the
channel, thanks for checking it out and I want to formally invite you to join the community,
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let’s wrap it here. Thank you for watching and, until next time, have a great day!