It’s been a banner year for IPOs, but it has also been a mixed bag – and billionaire Stephen Schwarzman’s Blackstone group is one of those investors who pick their failures.
The private equity giant has a significant stake in 10 companies that went public on the New York Stock Exchange or Nasdaq this year, including a company that was sold to a so-called SPAC, or specialist acquisition company.
Half of those companies, including the dating app Bumble and the oatmeal brand Oatly, are now trading well below their offer prices. Indeed, four of them have fallen more than 30% in the past 90 days, including Oatly whose stock has fallen 50% from $ 16.30 to $ 8.14, while Bumble has fell 35% over the same period, from $ 53.50 to $ 34.87.
This contrasts sharply with the S&P 500, which is up 24% for the year, and the Nasdaq, which is up 19%.
Granted, the IPO secondary market has been a disappointment this year across the board. As nearly 1,000 companies went public in 2021 – an unprecedented crop of deals that raised record proceeds of $ 300 billion – their shares are down 20% this year from the S&P 500, according to the professor. University of Florida Jay Ritter, known as “Mr. IPO” for his work on IPOs.
Many newly listed companies, especially in the tech and healthcare industries, have not grown fast enough to justify their trading multiples of earnings, some of which have exceeded earnings 20 times, said Ritter. The Renaissance IPO exchange-traded fund, which tracks recent IPOs, is down 9% this year.
“Investors were buying IPOs based on a lot of optimistic assumptions,” Ritter told The Post.
Nonetheless, Blackstone has been criticized, especially when listing companies in which it has invested through its growth fund.
Oatly, which listed its shares in May, missed its earnings forecast in its final quarter. Last month, Oatly revealed in a securities filing that she was forced to conduct a limited recall related to “loose metal objects” found in her milk processing equipment.
Meanwhile, Bumble – founded by tech entrepreneur Whitney Wolfe – saw a decline in overall user growth in the third quarter as analysts worried that its user growth due to a pandemic was not sustainable. The total number of paid users fell to 2.87 million in the three months to September, from 2.93 million in the previous quarter.
Shortly after its IPO in February, Bumble was trading as high as $ 84.80 per share. On Thursday, the dating app closed at $ 34.87.
Sema4 Holdings, a genetic testing company spun out of Mount Sinai Health Systems, merged with a blank check company and began operations in July. Sema4 lost $ 89 million in operating profit last quarter on $ 43 million in revenue and is also losing money at the gross margin level. Some investors fear the company will not be able to renew the big contracts it won during the pandemic.
“What’s interesting is that the root cause of the poor stock price performance in all of this appears to be operational execution, missteps and poor business models, not market shifts,” he said. notice an IPO investor. “Why are some of these companies public? ”
Sema4 shares over the past 90 days have fallen more than 40% to $ 4.67.
Blackstone told The Post that its IPOs in 2021 delivered “outstanding absolute and relative performance” – calculating they are up 32% on average since their IPO.
This statistic, however, includes automotive technology company Sona Comstar, which has listed its shares on the National Stock Exchange of India.
Elsewhere, Blackstone’s biggest winners include Texas-based business process outsourcing firm TaskUs, which, since its IPO in June, has risen 115%. Healthcare company Apria is up 53% year-to-date, and Imago Biosciences is up 45% year-to-date and continues to grow.
“A lot of these IPOs are high growth, technology and life science companies – these and many other IPOs have seen a similar retracement in the fourth quarter almost everywhere,” said a spokesperson for Blackstone.
“We also believe that these companies are well positioned for long-term success and continue to be substantial shareholders in alignment with their public shareholders.”
More generally, Blackstone pointed to his “excellent track record of helping build many very successful, long-term public companies,” citing Hilton, whose IPO investors he said have tripled their money. Blackstone-backed Tradeweb is trading at nearly 4 times its IPO price and Invitation Homes has more than doubled, according to the Blackstone spokesperson.