IPO This Week features Snowflake, Unity Software, JFrog, and Sumo Logic as they look to IPO in a week where 12 companies look to offer their stock to the …
If you like hearing about all of the upcoming
IPOs every week, you’ve come to the right
place. . And, if there’s one week you don’t
want to miss, it’s this one. Today we’ll
talk about 12 companies scheduled to go public
this week headlined by arguably the most anticipated
and hyped company of the year, Snowflake.
Welcome to IPO This Week for the week of September
14th, 2020.
Welcome to the Healthy, Wealthy, and Wise
channel and our weekly feature, IPO This Week
where we talk about ALL the companies going
public, whether it’s by a traditional IPO,
a SPAC or a direct listing. As always, I want
to thank everyone in the community for coming
back… and in this week in particular, where
the number of our subscribers TRIPLED from
the week before. What an exciting week, thank
you so much—you guys kept me busy in the
comments but I really enjoyed the discussions
and your great feedback. And for those of
you here for the first time, my name is Kevin
and I hope that after watching this video,
you’ll want to subscribe and become a part
of community, as well, but I know I have to
prove myself first. So I’ll check back with
you at the end.
Now after a couple of weeks with very little
activity in the IPO world, this week we bounce
back with a full slate of companies to cover,
including some really popular ones, and I’m
talking about more than just Snowflake. I
know Snowflake is the headliner, but the undercard
is pretty strong, as well; in fact, according
to Nasdaq.com, this week is expected to be
the biggest week for the IPO market by deal
count and proceeds since May of 2019 when
Uber went public. Now since many of you are
new to the channel, I just want to let you
know what the typical format is for IPO This
Week; for this show, I’ll give you overviews
for every company scheduled to go public as
of this recording; plus I’ll go over all
of the upcoming lock-up and notable quiet
period expirations. I will tell you upfront
for this week, there are no companies that
we expect to have their lock up periods expire.
And for notable companies that have their
quiet periods ending, this week we have four:
on Monday the 14th, we have three biotechs
Harmony Biosciences (HRMY) Inhibrx (INBX)
and Kymera Therapeutics (KYMR). And then on
Tuesday the 15th, we have a medical device
maker, Nano-X Imaging (NNOX). So with these
quiet periods ending, we can expect market
and research reports to come out from the
analyst firms who have been involved in the
IPO which often are positive and could lead
to a boost in the stock price once they are
released. Savvy investors will keep an eye
on the quiet period and lock up expiration
dates for opportunities to trade the stock
at better prices. For some of you newer to
the channel, if you’re looking for more
information on the lockup and quiet periods,
I have a video detailing the IPO process and
how I applied it to Albertsons Companies which
IPO’d earlier this summer and that video
covers these topics, so definitely check it
out…I’ll link it for you.
Now with 12 companies this week and the fact
most of you don’t want to watch me talk
for hours, I’ll be as concise as I can and
give you just the most important pieces of
information for each company including the
expected trading date. For companies there
is a lot of interest in, I’ll follow up
with a separate video that is more in-depth
for those companies and I try to release them
the day before they start to trade. Obviously,
this week I’ll have a featured video on
Snowflake because I know how much interest
in the company there is. And there is a good
chance I will have a second company with a
featured video this week, as well’ I’ll
let you know what company that is when I get
to them, so hang on for that.
Please keep in mind that since information
on IPOs can be fluid, where companies can
get added to the calendar as the week goes
on, I’ll update in the comments unless someone
beats me to it. And then just one final thing
before we get started, please know 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.
Alright, being that we have 12 companies to
cover, let’s jump into it.
First up, we have commercial real estate investment
trust, Broadstone Net Lease, ticker BNL who
plans to raise 603 million dollars with their
IPO. The REIT’s portfolio consists of 633
properties across the US and Canada, the majority
of those being single-tenant properties, and
some of those tenants are names you know,
such as Red Lobster, Outback Steakhouse, Siemens
and Krispy Kreme. Their portfolio includes
27.4 million rentable square feet producing
an annualized base rent of 288 million dollars.
Broadstone plans to offer a 5.6% yield at
the midpoint of its proposed share price range
of 17 to 19 dollars. Something to keep in
mind is that only 16% of its annualized base
rent came from investment grade tenants as
of June 30th of this year and with the uncertainty
in economic conditions from the pandemic,
you might want to consider how commercial
real estate will fare in the short to mid-term.
One thing Broadstone has going for it is that
their portfolio is somewhat diverse, with
44% being industrial properties and 20% being
in healthcare, two of the areas that haven’t
been as negatively impacted by the pandemic
on an ongoing basis. The remaining part of
their portfolio that might be a little more
exposed due to the current conditions, including
the work from home trend, includes 10% in
office space, 15% in restaurants, and 9% in
retail. Just something to consider when looking
at potential risk factors. As of now, we expect
the IPO to be priced on Wednesday with trading
to begin on Thursday the 17th. Note that the
dates on your screen are for all of the companies'
IPO date where pricing is set and then trading
usually beginning the next day. I don't want
anybody to be confused on that.
Let’s jump into the medical side of things
next with a biotech named Metacrine, symbol
MTCR who plans to raise $85 million at a $364
million market cap. The company is developing
differentiated therapies for liver and GI
diseases, and is currently in a Phase 1 trial
for its candidate therapies for Nonalcoholic
steato-hepatitis, commonly referred to as
NASH. If you don’t know what NASH is, it
can be defined as liver inflammation and damage
caused by a buildup of fat in the liver where
it can get worse and cause scarring of the
liver, often leading to cirrhosis. NASH is
similar to the kind of liver disease that
is caused by long-term, heavy drinking, but
in this case, alcohol does not cause it. You
will want to keep in mind when considering
the company, that while there are no approved
therapies for NASH, several competitors are
in later stage trials, so potentially closer
to getting something to market than Metacrine.
Again, the company is looking to raise $85
million with their IPO with pricing expected
to be between $12 and $14. As of today we
expect the IPO to occur on Tuesday the 15th
with trading beginning on Wednesday.
Sticking with medical companies, we have Outset
Medical, ticker OM who plans to raise $175
million at a $1 billion market cap. The company
provides a hemo-dialysis system for acute
care and home settings, designed to be lower-cost
and easier to use than competitors. The company
sells an integrated system called Tablo, which
is composed of a console with integrated water
purification, a single use cartridge and Tablo
connectivity and data sharing. The benefit
of the system to clinics and other healthcare
facilities is that they no longer need a dedicated
water cleaning system just for dialysis purposes.
Outset is still commercializing in the home
market, for which its device was approved
in March 2020; having that approval is big
for the company and in your assessment of
it. At this point, the company has been highly
unprofitable, generating negative gross margins
to date, and burning through a lot of cash…although,
they are starting to show stronger revenue
growth. According to a 2017 market research
report by Grand View Research, the U.S. market
for hemodialysis and peritoneal dialysis reached
$60 billion in value in 2015 and forecasts
a Compounded annual growth rate of 6.0% from
2015 to 2025.
The main drivers for this expected growth
are a rise in the incidence of renal system
failure among an aging population and increased
availability of services and new devices.
I had a good discussion in the comments of
another video from someone who asked about
Outset Medical and my initial thoughts were
that if they have a cost-effective solution
that allows people to have dialysis at home,
they are going to pull in a ton of insurers
to use that option vs having to pay the expense
of 3 days per week to a costlier outpatient
clinic, while also eliminating the cost of
transportation that people with end stage
renal disease often need. Obviously, the key
is if they can execute on that.
Of the 175 million dollars they look to raise,
about 77 million is slated to go towards marketing
and sales, 34 million for research and development,
and the remainder going towards working capital
and other corporate purposes. We expect the
IPO on Monday with pricing between $22 and
$24 with trading to then begin on Tuesday
the 15th.
The next one on the list is another early
stage biotech, Dyne Therapeutics, ticker DYN.
The company is developing therapies for rare
muscular diseases such as myotonic dystrophy
type 1 and Duchenne muscular dystrophy. The
company is in the preclinical stage which
means they haven’t entered into Phase 1
safety trials as of yet. So obviously they
are years away from bringing anything to market,
and that’s even if everything goes well…clearly
something you want to consider before jumping
in. And being at this stage in the company’s
development, they obviously don’t have any
revenue to speak of. Dyne plans to raise $175
million at a $782 million market cap with
the IPO set for Wednesday and pricing expected
to be between $16 and $18. Trading is slated
to begin on Thursday the 17th.
Next up is American Well Corporation or Amwell,
ticker symbol AMWL, a telehealth provider
who plans to raise $525 million at a $3.6
billion market cap. Not surprisingly, the
onset of the pandemic drove demand for the
company's system, with a 300% increase in
total monthly telehealth visits in Q2 2020
from Q1.
The company allows customers to add to existing
healthcare plans and providers with subscription-based
tools and other services. Right now, they
are pretty unprofitable with a large accumulated
deficit, but the company is benefitting with
revenue growth from the accelerated adoption
of telehealth services caused by the pandemic.
They do have competition in the market, with
Teladoc being the telehealth company having
the top brand name recognition.
For the industry in general, according to
a 2020 market research report by MarketsAndMarkets,
the global market for telehealth software
and services is expected to reach $55.6 billion
by 2025, up from a forecast of $25.4 billion
in 2020 which amounts to a Compound Annual
Growth Rate of 16.9%.
The main drivers for this expected growth
are reported to be a sharp increase in the
monitoring of chronically ill and elderly
patients and improved telehealth monitoring
devices and connectivity, while providers
also continue to offer an increased number
of specialty services remotely as they seek
to improve care quality while increasing productivity
and reducing costs.
We expect the IPO on Tuesday with pricing
anticipated to be between $14 and $16 with
trading to then begin on Wednesday the 16th.
Getting away from health related companies,
we have Pactiv Evergreen, ticker PTVE. The
company has gone by a variety of names since
1959 and is the largest North American maker
of packaging for the foodservice, food merchandising,
and beverage industries, and according to
nasdaq.com, has a #1, #2, or #3 market share
in 80% of its products.
According to management, the company offers
more than 13,000 products produced by 900
production lines. The company sells its products
through distributors and directly major global
companies, with its customers including McDonald's,
Starbucks, Tyson, KraftHeinz, and Coca Cola.
From information posted on thestreet.com,
according to a 2020 market research report
by Grand View Research, the global market
for food packaging was an estimated $303 billion
in 2019 and is expected to grow at a Compound
annual growth rate of 5.2% from 2020 to 2027
with the expected growth coming from an increasing
desire for food and beverage convenience,
greater performance, improved shelf life and
a reduced environmental footprint. The company
plans to raise $800 million at a $3.4 billion
market cap, using its IPO proceeds to pay
down debt versus growing the company, always
a little red flag for me. The IPO is scheduled
for Wednesday with pricing to be set within
a range of 18 to 21 dollars. Trading will
then begin on Thursday.
The next one I’m just going to briefly mention
is Vitru, ticker VTRU, a Brazilian digital
education provider. According to nasdaq.com,
the company is a leading postsecondary digital
education provider in Brazil, offering distance
learning products as well as in-person tutoring
services. The company’s margins expanded
in the first half of 2020, though revenue
growth decelerated. From thestreet.com, Vitru’s
recent financial results can be summarized
as the company having growing topline revenue,
Increasing gross profit, but lowered gross
margin percentage, a swing to operating profit
and margin, and increasing cash flow from
operations.
The company plans to raise $258 million at
a $541 million market cap. Pricing is expected
to be set on Wednesday between $22 and $24,
with trading then beginning on the 17th.
Another one to briefly mention is StepStone
Group, ticker STEP, a global private markets
investment firm that provides customized investment
solutions, as well as advisory and data services
to clients. According to Nasdaq.com, the company
oversaw $292 billion of private markets allocations
as of June 30 of this year, though apparently
its operations were hit hard by the pandemic.
StepStone plans to raise $280 million at a
$1.6 billion market cap at its IPO on Tuesday,
with shares expected to be priced between
15 and 17 dollars. Trading will begin on Thursday.
Now to the 4 biggest names left of the board,
and not surprisingly, they are all tech companies.
Let’s start off with Sumo Logic, ticker
SUMO, don’t you like these easy symbols
to remember? The company was founded in 2010
to develop log management software to enable
organizations to continuously monitor and
respond to their IT infrastructure in real-time.
The company provides a monitoring and analytics
platform through a subscription service to
its more than 2,000 enterprise customers of
all sizes, including big ones such as Alaska
Airlines, Brown University, JetBlue, Land
O’Lakes, LendingTree, Major League Baseball,
Netflix, Petco, Salesforce.com, and ULTA Beauty.
The cloud-native platform has operational,
security and business intelligence capabilities,
and is referred to as its 'Continuous Intelligence
Platform’.
According to a 2020 market research report
by ResearchAndMarkets, the global log management
software market is expected to grow from $1.9
billion in 2020 to $3.7 billion in 2025 which
represents a forecasted Compounded Annual
Growth Rate of 14.1%. Some of the factors
driving this expected growth are a growing
reliance on IT infrastructure, application
sprawl and complexity, and the increasingly
large amount of data generated by businesses.
When thinking about the industry as whole,
we have to consider who they are competing
against, and some of those companies include
heavyweights like Amazon Web Services, Microsoft
Azure, and Google Cloud. However for more
direct competition, Sumo Logic names Splunk
and Elastic as their primary competitors in
their S-1 filing.
While Sumo Logic has been unprofitable and
expects to be so in the near future, the company
is reporting strong revenue growth from 2018
through 2020, starting from $67.8 million
in 2018 increasing to $103.6 million in 2019
and then growing to $155.1 million in 2020.
They also have a strong gross margin that
has been over 70% for the past two years.
If you’re looking for a fast growing tech
company, this is one to consider. The company
plans to raise $281 million at a $2.3 billion
market cap at its IPO on Wednesday where pricing
is expected to be set in a range from 17 to
21 dollars. Sumo Logic will then start trading
on Thursday.
Next up we have a company that sells software
tools to help streamline app development named
JFrog, ticker FROG, another easy one to remember.
This is a company that we talked about some
last week.
JFrog was founded in 2008 with the mission
to develop an integrated and full-features
system to enable software development and
IT operations teams to more quickly, and easily,
develop and deploy new software releases.
The company touts that they built the world’s
first universal package repository named JFrog
Artifactory which fundamentally transformed
the way that the software release cycle is
managed, stating that their package-based
approach to releasing software allows releases
to be continuous and software to always be
current.
In their filing, the company did mention that
due to the pandemic, they have experienced
slowed growth and expect to experience slowed
growth or even a decline in new customer orders
for the platform, as well as lower demand
from existing customers for upgrades within
the platform, primarily due to changes in
customer spend patterns and IT budgets.
Yet, at the same time, they have also reported
signals that indicate the acceleration of
trends in support of digital transformation,
Development-Ops, and the transition to the
cloud. And also, they've reported that they
have generated a record number of new business
leads during the second quarter of 2020.
Another positive bit of information is from
a slightly dated 2018 market research report
by MarketsAndMarkets forecasting a strong
24.7% compounded annual growth rate through
2023 in the global market for DevOps software,
citing reasons of an increasing need for continuous
software release capabilities as organizations
seek to gain an edge through their superior
software system operation.
Currently the company has over 58 hundred
customers and has experienced strong growth
in revenue. From their filing, they note that,
while they have achieved positive operating
cash flow and free cash flow for each of the
past five years, they have still incurred
losses in all years since their incorporation.
The IPO is set for Tuesday where JFrog expects
share pricing to be set within a range of
33 to 37 dollars which at the midpoint, would
raise $405 million at a $3.6 billion market
cap. After that, public trading is scheduled
to begin on Wednesday the 16th.
Up next, we have Unity Software, ticker symbol
U, a leading software platform for creating
and monetizing video games. Their platform
provides a comprehensive set of software solutions
to create, run and monetize interactive, real-time
2D and 3D content for mobile phones, tablets,
PCs, consoles, and augmented and virtual reality
devices.
As of June 30, 2020, they had approximately
1.5 million monthly active creators in over
190 countries and territories worldwide. The
applications developed by these creators were
downloaded over three billion times per month
in 2019 on over 1.5 billion unique devices.
Unity is responsible for about 53% of the
top 1,000 games in Apple’s app store and
Google Play.
Because the IPO is set for Thursday with trading
beginning on Friday, I plan to make a featured
video for the company to come out before it
hits the market, so be sure to look out for
it. Better yet, have your notification bell
turned on so you know right when it comes
out.
But as a preview to that video, some highlights
of the company’s financials include increasing
revenue and strong gross margins of over 70%
in the past 2 years. They do have significant
operating losses due to high research and
development costs, including those costs being
up 40% from the previous year. Now recently,
they have shown a reduction in the amount
of cash used in operations, although in their
filing, they state that can fluctuate.
The biggest reason to expect the company to
continue to grow is that there is a large
global gaming industry market that looks to
continue growing in the double digits year
after year through at least the middle of
the decade.
With pricing expected to come within a proposed
pricing range of $34 to 42 dollars, at the
midpoint, the company plans to raise $950
million at an $11.7 billion market cap.
Again look for trading to start on Friday.
And barring any unforeseen circumstance, I’ll
have more information to share in that upcoming
video I mentioned.
And last, but certainly not least, we have
cloud data and certified unicorn, Snowflake,
ticker symbol SNOW finally set to begin trading
on Wednesday. For many of you, the long summer
wait is over and SNOW is in the forecast.
If that just made you roll your eyes, I get
it, but I can't help myself sometimes.
Planning to raise $2.2 billion at a $28.2
billion market cap, Snowflake is by far the
largest deal of the week. In a surprise twist,
the company revealed last week that they plan
to raise over $800 million from Warren Buffett’s
Berkshire Hathaway, as well as from Salesforce
in a concurrent private placement.
Because of the amount of interest in the Snowflake
IPO, this isn’t my first video on the company;
you can see other videos that I’ve made
by checking out a Snowflake playlist I’ve
created which I’ll link for you. For today,
I’ll give you an overview of the company,
but rest assured, I will have a comprehensive
video coming out on Snowflake on Tuesday where
I’ll talk much more about the company and
I’ll look at what I believe are the pros
and cons of the IPO. For today, we’ll stick
with the background of the company and some
of the highlights of the data.
So as most of you know, Snowflake provides
a cloud-based data warehousing platform. The
company is based in California, founded in
2012 with a vision of creating a data connected
world where organizations have seamless access
to explore, share, and unlock the value of
data. They are pioneering the Data Cloud,
an ecosystem where Snowflake customers, partners,
and data providers can break down data silos
and derive value from rapidly growing data
sets in secure, governed, and compliant ways.
To do so, their cloud-native architecture
consists of three independently scalable layers
across storage, compute, and cloud services.
The storage layer ingests massive amounts
and varieties of structured and semi-structured
data to create a unified data record.
The compute layer provides dedicated resources
to enable users to simultaneously access common
data sets for many use cases without latency.
And then the cloud services layer intelligently
optimizes each use case’s performance requirements
with no administration. This architecture
is built on three major public clouds, which
I'll get to in a second, and across 22 regional
deployments around the world. These deployments
are interconnected to create a single Cloud
Data Platform, delivering a consistent, global
user experience.
Snowflake says it has 3,117 customers as of
July 31st of this year, including 146 of the
Fortune 500 companies. Some of the bigger
name customers include Capital One, Sony,
Office Depot, DoorDash, Instacart, Adobe,
DocuSign, Micron and Dropbox, so you can see,
they are involved with customers in a variety
of industries.
While the company is still not profitable
with a net loss of $348.5 million for the
fiscal year ended January 31, 2020, the company
is reporting significant growth in recent
years. And when I say significant, I mean
significant. For the fiscal years ended January
31 for both 2019 and 2020, their revenue grew
from $96.7 million in 2019 to $264.7 million
in 2020, representing year-over-year growth
of 174%–that type of growth is what’s getting
everyone’s attention! And gross margins
are continuing to improve as well. Again,
for the fiscal years ended January 31, 2019
and 2020, the gross margin improved from about
46% to 56%.
Also adding to Snowflake’s appeal to investors
is the company’s CEO, Frank Slootman, who
joined the company last December. He has a
reputation for making money on taking private
companies public. Previously, he was Chairman
of ServiceNow and before that, he was also
successful in taking Data Domain public in
2007 before selling it for big money just
2 years later.
On the competition side, they do go head to
head with some of the heavyweights of tech
who have their own cloud data warehouse services,
these include Amazon’s AWS Redshift, Google’s
Big Query and Microsoft’s Synapse. But as
I mentioned in a previous video and alluded
to just a minute ago, Snowflake actually is
a customer to those same 3 companies because
their platform operates on the public cloud
infrastructure provided by Amazon Web Services,
Microsoft Azure, and the Google Cloud Platform.
It really is an interesting dynamic and one
to think about when it comes to pricing between
the companies.
The Snowflake IPO is set for this Tuesday,
where it expects its shares to be priced within
a range of $75 to $85. And then it’s off
to the races on Wednesday when it hits the
public market for the first time. Again, I
will have a more detailed and comprehensive
video coming out before trading begins so
definitely watch out for it.
Well this was a long episode, thanks for hanging
in there…I hope you enjoyed it, and if you
did, please hit that like button and share
with your friends. And for those of you here
for the first time, I hope I convinced you
to join the community on the type of content
I deliver…afterall, it’s totally free,
you just gotta press that red subscribe button…we’d
love to have you onboard. On that note, let’s
wrap it here for now. Thank you for watching
and, until next time, have a great day!

Leave A Comment

Your email address will not be published
*