These new listings could take off in June.
High-profile initial public offerings have been a mixed bag for investors in recent years. Investing in IPOs can be a high-risk, high-reward endeavor. New listings such as Beyond Meat (ticker: BYND) and Zoom Video Communications (ZM) have been home runs, while IPOs like Uber Technologies (UBER) and Blue Apron Holdings (APRN) have been disasters. The 2020 IPO market is heating up in June, with several of the year's largest and most highly anticipated new listings hitting the market for the first time. Here are seven of the biggest IPOs to watch in June that could take the market by storm.
Royalty Pharma (RPRX)
Royalty Pharma is a biotech company with a unique business model that involves buying royalty interests in biopharmaceutical products. The company also invests in financing clinical trials and is essentially a private equity firm that focuses on the pharmaceutical industry. In its latest regulatory filing, Royalty Pharma said it plans to raise up to $1.96 billion in its IPO, which would make it the biggest IPO of the year. In the first quarter, Royalty generated $500.9 million in revenue, up 15% from a year ago. Royalty is expected to price its IPO on June 16.
ZoomInfo Technologies (ZI)
ZoomInfo focuses on leveraging artificial intelligence to assist corporate sales and marketing teams in optimizing customer outreach. ZoomInfo priced its IPO at $21 per share on June 3, above its target range of between $19 and $20. ZoomInfo was the first major technology IPO since the health crisis began, and investors were not hesitant to pull the trigger. The stock skyrocketed about 60% on its first day of trading and is now trading about 140% more than its IPO price. ZoomInfo reported 40% revenue growth in the first quarter, and its market cap is now around $15 billion.
Warner Music Group Corp. (WMG)
Warner Music is the world's third-largest recording label. The company sold 77 million shares at an IPO price of $25 earlier this month, making it the largest IPO of 2020. The IPO exceeded the company's targets of 70 million shares and a price range of between $23 and $26 per share. Warner Music shares gained about 20% on their first day of trading and are now up close to 30% from their IPO price. Warner's top artists include Cardi B, Ed Sheeran and Bruno Mars, and its music streaming revenue was up 12% year over year in April.
Legend Biotech Corp. (LEGN)
Legend Biotech is a Chinese biotechnology company that develops cell-based cancer therapy. Its first potential product could be a chimeric antigen receptor T cell therapy that it has developed in partnership with Johnson & Johnson (JNJ). Legend has already earned $460 million in upfront and milestone payments from Johnson & Johnson and is in line for up to $1.34 billion more if the product stays on track. After initially seeking to raise $350 million in its IPO, Legend ended up raising $424 million. Legend priced its IPO shares at $23, and the stock has gained about 65% since hitting the market.
Online used-car seller Vroom priced its IPO at $22 per share on June 9, but the stock more than doubled on its first day of trading before pulling back to around $42 throughout the week. Vroom's market capitalization is now around $5 billion. Its e-commerce platform unit sales were up 145% year over year in April. The company reported 39% revenue growth in 2019 and 60% growth in the first quarter of 2020. Vroom generated a net loss of $143 million in 2019, but the company has said it should be profitable once it reaches 200,000 annual vehicle sales.
The Azek Co. (AZEK)
Azek produces sustainable building materials for outdoor living, including decks, molding, trim, wood and outdoor furniture. Azek reported $411.6 million in revenue for the six months ending March 31, up 15.1% from a year ago. During that same period, the company reported a $5.8 million net loss. It also carries $1.2 billion in debt. Azek priced its IPO at $23 per share on June 12, raising about $765 million. The stock got off to a strong start in its first day of trading, finishing the day up 18% with a market cap of around $3.8 billion.
Dada Nexus (DADA)
Dada Nexus is a Chinese online grocery retailer that raised $320 million via its IPO on June 5. The company priced its IPO shares at $16, valuing the company at around $3.5 billion. Walmart (WMT) and Chinese e-commerce giant JD.com (JD) reportedly bought a combined $90 million of Dada Nexus IPO shares. Unfortunately, Dada Nexus hasn't had the type of stellar market debut of other top June IPOs. The stock is down about 6% from its IPO price. Investors may be concerned about a potential delisting of Chinese stocks due to the Holding Foreign Companies Accountable Act.
Keep an eye on these IPOs in June:
-- Royalty Pharma (RPRX)
-- ZoomInfo Technologies (ZI)
-- Warner Music Group Corp. (WMG)
-- Legend Biotech Corp. (LEGN)
-- Vroom (VRM)
-- The Azek Co. (AZEK)
-- Dada Nexus (DADA)
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