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After a long gap in IPO debuts over the last month, the IPO market has returned in a strong way.
It’s been relatively quiet on the IPO front for nearly a month now. Until this week. It was a very busy week for initial public offerings, reaching a fever pitch today as seven new companies hit the market.
The success of certain IPOs continues to prove that investors want to own the high-profile names.
A couple of the biggest IPOs from the last month were Habit Restaurants (NASDAQ: HABT) and Virgin Atlantic (NASDAQ: VA). Habit is now up 110% since its $18 IPO price. And Virgin Atlantic is up 50%.
But a quick check of the Renaissance IPO ETF (NYSEArca: IPO) shows that it’s now underperforming the S&P 500 by almost a percentage point.
That tells you that not every IPO is a winner. Neuroderm (NASDAQ: NDRM) and Neothetics (NASAQ: NEOT), for example, both completed their IPOs in mid-November, but shares are down over 30% since then.
With all that in mind, here were the top four IPOs from this week based on their performance thus far:
Top IPO Of The Week No. 1: LendingClub (NYSE: LC)
LendingClub debuted in the public markets yesterday, with a $15-per-share IPO price. The stock is already up 55%.
Founded in 2006, LendingClub has been a trailblazer in the consumer finance space. As a peer-to-peer lending site, it connects lenders with borrowers and takes a fee of the loan for itself.
The unique thing is that LendingClub is attacking two markets. One is that it solves the problem of finding a loan, which is still fairly difficult considering the fact that conventional credit is still somewhat tight. Second, it also gives individuals acting as lenders an investment opportunity that is unlike most available assets.
Having funded some $6.2 billion in loans over the past seven years (and $1 billion in the second quarter of 2014 alone), it’s becoming a real competitor for conventional banks. One thing holding LendingClub back is that the company is still prohibited from operating in all states.
Top IPO Of The Week No. 2: Hortonworks (NASDAQ: HDP)
Hortonworks IPO’d today at $16 a share and is already up 40%. This tech company is a data management enterprise that focuses on “big data.” It’s an open-source platform that was founded by the likes of Yahoo! (NASDAQ: YHOO) and Hewlett-Packard (NYSE: HPQ) in 2011. The two still own over 25% of the company.
Its two largest customers are Yahoo! and Microsoft (NASDAQ: MSFT). Even with all these big names involved, Hortonworks still generated less than $50 million in revenues over the last 12 months, compared to its near $1 billion market cap. Be careful with this one, despite the early gains.
Top IPO Of The Week No. 3: New Relic (NYSE: NEWR)
New Relic also debuted today. Shares are up 40% from its $23 IPO price. New Relic is another big-data analytics company, providing products to analyze large amounts of data.
But with a $1.5 billion market cap, no earnings and $85 million in annual revenues, it appears to be another relatively expensive tech company. New Relic does have over 10,000 clients, but competition in the big-data space is large and growing. Big name competitors include HP, Oracle (NYSE: ORCL) and IBM (NYSE: IBM).
Top IPO Of The Week No. 4: Momo (NASDAQ: MOMO)
Momo went public yesterday at $13.50 and is up 26% since. Dubbed the “Tinder of China,” Momo is a Chinese mobile social networking app. Momo was founded in 2011 and has over 60 million active monthly users.
By contrast, Snapchat has over 100 million monthly actives. But Momo only generated $28.5 million in revenues over the last 12 months. Its market cap is $1.5 billion – which means that Momo trades at a very high price-to-sales ratio.
The other concern with Momo: there’s no shortage of social media companies, especially in China.
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