Setting the stage for Twitter's highly anticipated IPO, two new issues enjoyed huge gains in the first day of trading Friday.
Qunar Cayman Islands (QUNR), China's leading online travel aggregator site, rose 89% to 28.40. Qunar, 61% owned by Chinese search giant Baidu (BIDU), priced at $15, above its expected range.
Container Store (TCS), a retailer of home storage and organization products, doubled to 36.20 after its initial public offering priced at $18, also above forecasts.
Another high-profile IPO was 58.com (WUBA), which rose 42% on Thursday's debut. 58.com runs an online classified ad market similar to Craigslist.
Last week's nine IPOs brought the year-to-date total to 182 vs. 121 in the same period last year, according to IPO research firm Renaissance Capital. New issues are on track to pass the latest peak in 2007, which had 213.
"The pace has really picked up to a level not seen in recent years," said Francis Gaskins, research director for Equities.com and founder of IPOdesktop.com.
Some 13 IPOs are slated for the week of Nov. 4. Twitter (TWTR) is expected to price late Wednesday, with a NYSE launch Thursday. It's the most-studied IPO since Facebook (FB). The short-messaging website plans to offer 70 million shares at $17-$20, raising $1.3 billion. That would give it a market value of about $12.8 billion.
China RevivalQunar and 58.com suggest that U.S. IPOs of China companies are regaining momentum. In 2010, a surge of China IPOs later evaporated amid a slew of accounting scandals while other stocks tumbled after missing targets. Qunar and 58.com did well even after NQ Mobile (NQ) collapsed recently on Muddy Waters' claim of "massive fraud.
"If the China IPO comes from a major underwriter and they have strong growth they are sellable," said Gaskins.
Goldman Sachs (GS) led the Qunar IPO underwriting, while Morgan Stanley (MS) led 58.com.
Alibaba, China's e-commerce and payments giant, is expected to file for a U.S. IPO soon.
Qunar and 58.com also fit the trend for hot IPOs: fast growth and a strong position in a booming market. With those criteria, losses haven't worried investors.
Money-losing cybersecurity firm FireEye (FEYE) and Internet ad tech company Rocket Fuel (FUEL) rose 80% and 93% in their debuts, respectively.
Qunar says it's China's most-visited travel site with more than 200 million users. Its mobile app has been downloaded more than 100 million times. It processed about 1.4 billion search queries for airline tickets and hotels in the first half of 2013.
Qunar doesn't book reservations, but generates revenue on ads and driving traffic to other sites. In the first half of 2013, revenue rose 76% to $58.5 million. It lost a net $2.8 million vs. a year-earlier $10 million loss.
58.com says it's China's top online marketplace for local merchants and consumers, with a 38% share of cash receipts. It collects data from about 380 cities, including housing, jobs, used goods, automotive, tickets and local services. 58.com has 130 million monthly unique visitors.
For the six months ended June 30 revenue rose 48% to $59 million. It earned $300,000 vs. a year-earlier $19 million loss.
Container Store hasn't been a fast-grower. Sales rose just 9% to $343.3 million in the 26 weeks ended Aug. 31, losing a net $688,000. But it sees an opportunity to expand to 300 stores from 62 stores in 22 states now. "Investors likely focused on the store growth potential and because it leads the category," said Gaskins.
- Container Store