IPOs Surging

The Renaissance IPO Index actually peaked a day later than the S&P 500 on February 20th, and after a 38.2% decline, it would find a bottom a week earlier than the S&P 500 on March 18th. Since then, the index has surged. In addition to IPOs beginning to come out of the woodwork, that strong performance is partially thanks to holdings in recent IPOs like Slack (WORK) and Zoom Video (ZM) which have become staples of the COVID economy. As shown in the charts below, the index has rallied 77.8% since that March 18th low; double the S&P 500’s performance in the same time-frame. As shown in the second chart below, that has led the ratio of IPOs to the S&P 500 to have gone nearly vertical and is now at new highs; pressing above the prior decade high for the ratio from 2014.

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On an individual level, IPOs in 2020 have actually done very well. So far in 2020, there have been 72 companies to announce initial public offerings. Only 24 of those have already begun trading (shown below) while another 3 have withdrawn. On average, these stocks are up 76.39% from their IPO. Fitting for a year with a global pandemic, the bulk of these IPOs have been Health Care names. The largest and one of the earliest of these was for Schrodinger (SDGR) which offered $50.3 billion. This has also been the best performing IPO this year having risen 274.41% since its IPO. IMARA (IMRA) is also up over 200% since IPO though it was a much smaller offering. The second largest of the year was for Warner Music (WMG) which offered $48.13 billion of stock last Wednesday. In addition to WMG, there have been five other IPOs to hit the market in the past week.  

(Click on image to enlarge)

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