|Bid||0.00 x 900|
|Ask||32.99 x 1000|
|Day's Range||30.81 - 32.77|
|52 Week Range||22.10 - 41.80|
|Beta (5Y Monthly)||N/A|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||38.50|
One of the hottest — though somewhat underappreciated — initial public offerings (IPOs) this year has been American Well (NYSE:AMWL). At the onset of the pandemic, few people wanted to venture out, let alone go to healthcare facilities. But, naturally the demand for medical consultations didn’t disappear during an international emergency. That’s when the telehealth industry stepped in, bolstering the case for American Well stock. Source: Stephanie L Sanchez / Shutterstock.com Out of the gate, AMWL has stormed higher since debuting around mid-September. But since hitting a peak of almost $42 on Oct. 7, the company has been trending inside a declining bearish channel. Much of that has to do with timing. Unlike its publicly traded rivals, the stock entered into the space after people became acclimated to the new normal. Still, I would take advantage of any discounted opportunities. American Well Stock and Covid-19 For one thing, it’s possible that American Well stock could become a buyout target.InvestorPlace - Stock Market News, Stock Advice & Trading Tips To be clear, I wouldn’t buy shares based on such a rumor. Nevertheless, the fact that this speculation exists points to the highly relevant business that underlines AMWL. As I’ll explain later, the bullish case will likely increase through this pandemic — and beyond it. More importantly, we should recognize that — while Americans have gotten used to Covid-19 — we’re not out of the woods yet. There’s still much that we don’t know about the novel coronavirus. The only thing we know for sure is that close contact with the infected is an incredibly high risk factor. 7 Airline Stocks to Buy on Pelosi Stimulus Hopes According to The Lancet, a peer-reviewed medical journal, frontline healthcare workers “had at least a threefold increased risk” of contracting Covid-19. However, “adequate availability of PPE [personal protective equipment] did not seem to completely reduce risk among health-care workers” providing care for novel coronavirus patients. If I’m interpreting the scientific data correctly, your best chance of avoiding Covid-19 is to stay away from high-risk transmission areas. Logically, this benefits American Well stock because its telemedicine business serves a great need via its contactless platform. A Second Wave Is a ‘Mulligan’ for AMWL Despite the immediate tailwinds for AMWL, it’s also fair to wonder if the pandemic will still provide upside for the telehealth company. At some point, this crisis will fade, which may pose a risk to shares. But something that White House health advisor Dr. Anthony Fauci said makes me believe that American Well stock can continue to ride the novel coronavirus narrative. Last month, Fauci recommended that “we need to hunker down and get through this fall and winter because it’s not going to be easy.” Moreover, CNBC reported the following: “Fauci noted that while new Covid-19 cases have decreased to less than 40,000 cases per day in the U.S. (a 16% decrease from two weeks ago, according to a New York Times database), that number is still ‘an unacceptably baseline,’ he said. “’We’ve got to get it down, I’d like to see it 10,000 or less, hopefully less,’ he added.” The problem is that the data from the Centers for Disease Control and Prevention says that the seven-day moving average at time of writing is over 59,000 cases. Not only are we not meeting Fauci’s threshold goal — we’re nearly six-fold above it. Off of this data, you can see why investors should still be considering American Well, despite being late to the game. Additionally, we should look at Europe. The Wall Street Journal reported that Covid-19 cases are accelerating there as well, causing hospitals to ramp up their preparation for the winter. More than likely, the U.S. healthcare system will have to do the same. All told, it’s completely possible that we could see an even worse second wave. And if so — as cynical and dark as it may be — that only helps the case for AMWL and investors who are thinking about jumping in. Not All Doom and Gloom That being said, it’s important to realize that the perniciousness of this crisis will not be a permanent circumstance. Yes, there is a possibility that the novel coronavirus could become endemic, meaning a vaccine might not be enough to stop it entirely. But even so, I trust the resilience of the global community as well as my fellow Americans. In some way, shape or form, we’ll find a way to address this threat. In that case, what happens to American Well stock? The way I see it, AMWL will still be relevant post-pandemic. In fact, one of the selling points for the telehealth industry is its ability to provide convenience and comfort to patients. For instance, NBCNews.com reported that iatrophobia — or the fear of doctors — “affects just 3 percent of the population.” That may seem small, but 3% of the U.S. population is roughly 10 million people. That’s a sizable consumer base that American Well can reach. And that’s what we know on paper. In reality, I’d be willing to bet that millions more have some form of iatrophobia. Or even, just prefer the convenience. That only adds to American Well’s addressable market. Therefore, whether you get into AMWL for the pandemic or for the new normal, this is a relevant buy. Be sure to take advantage of any dips along the way. On the date of publication, neither Matt McCall nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article. Matthew McCall left Wall Street to actually help investors –by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. Click here to see what Matt has up his sleeve now. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG Top Stock Picker Reveals His Next 1,000% Winner Radical New Battery Could Dismantle Oil Markets Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company The post How a Second Wave May Offer a âMulliganâ for American Well Stock appeared first on InvestorPlace.
Despite political and economic uncertainty, U.S. exchanges still lead IPO activity in terms of the number of deals and total proceeds.
Over the last few weeks, several initial public offerings have helped prove that the equity markets are back on track. Recent IPOs like Snowflake (NYSE:SNOW) and JFrog (NASDAQ:FROG) have seen enormous first-day pops from their opening price. Investors are looking for growth, and most recent IPOs have been younger, early stage companies. It is not just the IPO market, either. So-called special purpose acquisition companies (SPACs) have brought dozens of companies public, many in growth industries like electric vehicles and online gambling. But the big gains for newly public companies, whether IPOs or SPACs, raise the same questions. At what point does valuation trump even impressive growth? And can a single industry really birth so many expected winners?InvestorPlace - Stock Market News, Stock Advice & Trading Tips For these seven recent IPOs, those questions seem paramount. Most have seen solid gains since going public. But all have significant concerns that suggest significant risk going forward. 7 Value Stocks To Buy in an Overvalued Market The IPO market doesn’t necessarily need to cool down for these stocks to do the same: American Well (NYSE:AMWL) Shift4 Payments (NYSE:FOUR) Laird Superfood (NYSEMKT:LSF) Social Capital Hedosophia Holdings II (NYSE:IPOB) Casper Sleep (NYSE:CSPR) Vroom (NASDAQ:VRM) Xpeng (NYSE:XPEV) Recent IPOs: American Well (AMWL) Source: Stephanie L Sanchez / Shutterstock.com The story behind American Well admittedly sounds attractive. The company is one of several telehealth plays garnering investor attention at the moment. The sector should see accelerated growth as the novel coronavirus pandemic draws interest from patients, doctors and insurance providers. But a closer look raises some concerns. Telehealth is going to be a growing industry, but American Well hardly has that industry to itself. In fact, its odds of garnering top market share seem relatively slim. The merger of Teladoc Health (NYSE:TDOC) and Livongo Health (NASDAQ:LVGO) is likely to create the telehealth leader in the United States, and potentially internationally. Meanwhile, investors are paying up big for AMWL stock, even after a recent pullback. Shares have rallied over 80% from their IPO price of $18. AMWL trades at over 40x trailing 12-month revenue. The company is not profitable, and likely won’t be until 2023. Admittedly, that type of valuation isn’t out of line for this market. But those kind of multiples usually are applied to companies that not only are in fast-growing markets, but have a real chance to lead those markets. With the Teladoc tie-up, American Well is playing for second. AMWL stock isn’t priced as such. Shift4 Payments (FOUR) Source: Shutterstock The payments space has seen no shortage of winners, and out of the gate Shift4 stock has been one of them. FOUR has rallied nearly 150% from its IPO price of $23. But there are reasons to believe that, at the least, FOUR stock is headed for some short-term pressure. Here, too, competition will be intense, as Shift4 goes up against giants like Square (NYSE:SQ), Stripe and PayPal (NASDAQ:PYPL). Shift4 aims to mitigate that pressure by focusing on key verticals — but those verticals include restaurants, hotels and retail, all of which are facing significant pressure from the pandemic. Valuation, meanwhile, looks stretched. FOUR trades at 100x next year’s earnings estimate. Price-revenue multiples appear less aggressive, but are explained by lower gross margins. And Shift4 reportedly was up for sale last year before pivoting to an IPO, which raises the question of why private shareholders were looking to cash out. Shift4 does have time to grow into its valuation, and a market capitalization under $5 billion doesn’t require the company to quickly become another giant in the space. But with the stock taking another leg up in recent weeks, it does seem like there’s a good chance the post-IPO rally is at or near an end. Recent IPOs: Laird Superfood (LSF) Source: David Tonelson / Shutterstock.com Laird Superfood gets its name from founder and well-known competitive surfer Laird Hamilton. The company develops plant-based foods, initially focusing on beverages, such as coffee creamer and coconut water. Last week, the company launched its first snack with flavored Pili nuts. With Beyond Meat (NASDAQ:BYND) opening eyes to the promise of plant-based foods, it is not a surprise that LSF stock has seen heavy buying after its IPO last month. Still, as with FOUR, there is a real question as to whether category strength alone can drive the stock higher. After all, LSF has more than doubled from its IPO price — in a little over three weeks. Its market capitalization now clears $400 million. Revenue over the past four quarters is less than $20 million. For now, this is a niche business in what remains, despite Beyond Meat’s growth, a niche category. Given that, a 20x-plus multiple sales looks full — if not outright stretched. Social Capital Hedosophia Holdings II (IPOB) Source: Shutterstock Social Capital Hedosophia II is one of the SPACs that have provided an alternative route to market. And it has made one of the biggest deals of the year, merging with digital real estate platform Opendoor. IPOB CEO Chamath Palihapitiya has called the company his “next 10x idea.” Many investors seem to agree. IPOB stock has soared since the deal was announced. It trades above $24 at the moment, up more than 100% since the merger was announced just last month. But there are reasons for skepticism as well. Opendoor itself sees a path to $50 billion in revenue, along with EBITDA margins of 4%-6%. At the midpoint, that assumes the platform would generate about $2.5 billion in EBITDA once the revenue target is reached. But Opendoor, based on the current IPOB stock price, already is valued shy of $17 billion — nearly 7x that figure. Assuming it takes a decade to hit that $50 billion mark (which is 10x 2019 revenue), using margin guidance investors could be looking at low double-digit annualized returns — if Opendoor delivers. Certainly, that is an outstanding investment in the best-case scenario, but there are risks as well. Zillow (NASDAQ:Z, NASDAQ:ZG) is moving aggressively into the same market. So are a significant number of startups. Those competitors will not only fight for revenue, but could squeeze margins as well. Realtors will fight to protect their turf too — perhaps by lowering commissions. More broadly, there is the real risk that the Opendoor model just doesn’t work. Arguing that U.S. home sales are “ripe for disruption” sounds innovative. But the vagaries of local markets, let alone individual properties, simply may not be captured by even the most powerful algorithm. At this point, at least some of the potential “10x” upside seems priced in. The risks, however, are not. Recent IPOs: Casper Sleep (CSPR) Source: Chie Inoue/Shutterstock.com The story for Casper Sleep is not over. But it is certainly not off to a good start. CSPR is one of the few recent IPOs to trade down. The stock is off about one-third from its initial price of $12 — which itself was cut sharply from an initial range of $17-$19. The core problem for Casper is simple: It is not growing fast enough. The novel coronavirus pandemic has benefited e-commerce players of all kinds. But the company delivered just 5% direct-to-consumer growth in its second quarter. Rival Purple Innovation (NASDAQ:PRPL) grew DTC revenue by 128% in the same quarter. Simply put, Casper is falling behind. And so it is little surprise that its stock has done the same. While CSPR has faded, PRPL stock has more than doubled since Casper’s IPO, gaining 244% so far this year. That needs to change. But catching up will take some time. In the meantime, there is an obvious question for Casper: If it can’t grow now, when exactly will it grow? Vroom (VRM) Source: Lori Butcher / Shutterstock.com E-commerce has been one of 2020’s hottest sectors, and the optimism has extended to the automotive industry. Carvana (NYSE:CVNA) has more than doubled this year, and gained a whopping 860% from March lows. Shift (NASDAQ:SFT) just went public via a SPAC merger that closed this week. And VRM, even with a pullback, has rallied 123% from its IPO price of $22. The obvious question is whether all of these companies can be winners, even if the pandemic drives increased online penetration of an industry that long has run on face-to-face dealings. The likes of CarMax (NYSE:KMX) and AutoNation (NYSE:AN) will roll out their own online options. The market is huge in terms of sales, but there simply may not be that much profit to go around. Again, VRM has pulled back, which does make valuation more constructive. But even at a lower price, the market still is pricing in a significant amount of success in terms of both market growth and Vroom’s market share. There doesn’t seem to be much room for error, and the pullback in VRM (and sideways trading in CVNA) may be a reflection that the market is recognizing that fact. Recent IPOs: Xpeng (XPEV) Source: Johnnie Rik / Shutterstock.com Perhaps no sector has been hotter in 2020 than electric vehicles. And so investors are looking for the next big EV winner — and some believe it is Xpeng. Perhaps. Xpeng does have a big opportunity in China, which should be one of the faster-growing EV markets in the world. But the company for now focuses only on high-end SUVs, putting it in direct competition with Nio (NYSE:NIO) and other domestic manufacturers. Tesla (NASDAQ:TSLA), of course, is ramping up its own operations in the country. Xpeng is growing nicely — but so are the dozens of EV manufacturers in the country. Remember, China offers generous subsidies, and its pandemic recovery is boosting manufacturers. It is hard to see even that growth supporting what is a $17 billion market capitalization on the back of just $300 million in revenue. And if the sector as a whole pulls back at all, XPEV could have a long way to drop. On the date of publication, Vince Martin did not have (either directly or indirectly) any positions in the securities mentioned in this article. After spending time at a retail brokerage, Vince Martin has covered the financial industry for close to a decade for InvestorPlace.com and other outlets. More From InvestorPlace Forget The Election… Pick These Stocks for the Win in 2021 Why Everyone Is Investing in 5G All WRONG America’s #1 Stock Picker Reveals His Next 1,000% Winner Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company The post 7 Red-Hot Recent IPOs to Ditch Now appeared first on InvestorPlace.