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25 IPOs that bombed on their first day

  • 25 IPOs that bombed on their first day

    Many analysts would argue that Uber's recent initial public offering was a failure. Uber's IPO—through a chain of stock price drops, starting with a 7.66% drop on the IPO's first day—saw a loss in value of $618 million, representing the greatest dollar loss for an American IPO since IPOs were first monitored in 1975, according to IPO scholar Jay Ritter of the University of Florida's Warrington College of Business Administration.

    An IPO, as a capital-raising tool, can reveal problems with a company's reputation, leadership, competition strategy, or product confidence. Uber has suffered from C-suite instability for some time now, which betrayed the company's $100 billion validation. Issues with its driver contractors and lingering pushback from regulators and the taxi industry did not help.

    With more than 60% of all IPOs launched between 1975 and 2011 having a negative absolute return after five years on the market, most initial public offerings are poised to fail sooner or later. The process of inviting investors to take a deeper look at a company typically reveals critical flaws that may be tough for a company to resolve and difficult to recognize immediately.

    To help understand how IPOs can go bad, Stacker looked at IPO data from June 2014 to June 2019 to determine which IPOs had the worst first-day returns in the last five years. To achieve this, Stacker gathered data from IPOScoop.com and the Warrington College of Business, filtering for IPOs that dropped at least 5% in price on their first day of trading. As IPO data tends to be proprietary, this list is inclusive, but not exhaustive. 

    For this analysis, Stacker looks at the IPO's offering price, and not its opening price. An offering price is a price the company is seeking for its stock, per the IPO's prospectus. The opening price is the price the stock first sells for when it is introduced to the market.

    It should be noted that first-day returns are not necessarily indicative of an IPO's success or the future profitability of a business. Facebook, for example, had a terrible 2012 IPO. Offering at $38, the company ended 2012 with a stock price of $17. Today, Facebook (NASDAQ: FB) sells at more than $170 per share. Keep reading to see which companies had a worse IPO first day than Uber.

    You may also like: 25 IPOs that skyrocketed on their first day

  • #25: Kaleido Biosciences

    - IPO offering price: $15
    - Closing price at end of first day: $14.23
    - Share price drop on IPO's first day: 94.87%

    Kaleido Biosciences is a pharmaceutical firm that seeks to study the human microbiome to find solutions to treat diseases and significantly improve the quality of health. Despite seeing an offering price downgrade from the $20 to $22 range, the company was still unable to make the expected price point. The IPO was to advance a drug candidate, KB195, from Phase 1 testing to Phase 2. At the end of trading June 10, Kaleido Biosciences (NASDAQ: KLDO) was selling at $14.25.

  • #24: Vaccinex

    - IPO offering price: $12
    - Closing price at end of first day: $11.38
    - Share price drop on IPO's first day: 94.83%

    Vaccinex is a pharmaceutical firm that seeks to create treatments for current serious diseases that have no effective medical solution. Ongoing trials include an antibody that will block the signaling of immune or inflammatory cells to an injury or cancerous tumor and a platform that would encourage the discovery of antibodies in the presence of an infection or virus. At the end of trading June 10, Vaccinex (NASDAQ: VCNX) was selling at $5.86.

  • #23: Alector

    - IPO offering price: $19
    - Closing price at end of first day: $18
    - Share price drop on IPO's first day: 94.74%

    Alector is a pharmaceutical firm exploring solutions to neurodegeneration. The company's methodology is to study how immune deficiencies and immune dysfunction may drive degenerative brain disorders. At the end of trading June 10, Alector (NASDAQ: ALEC) was trading at its offering price of $19.

  • #22: Berry Petroleum

    - IPO offering price: $14
    - Closing price at end of first day: $13.25
    - Share price drop on IPO's first day: 94.64%

    Berry Petroleum is a petroleum and natural gas extraction company based in California. The IPO was meant to buy back some of its common stock from mutual funds controlled by Benefit Street Partners and Oaktree Capital Management. Berry Petroleum was the first exploration and production company to offer an IPO since 2016. At the end of trading June 10, Berry Petroleum (NASDAQ: BRY) was selling at $10.44.

  • #21: YETI Holdings

    - IPO offering price: $18.00
    - Closing price at end of first day: $17
    - Share price drop on IPO's first day: 94.44%

    YETI Holdings is the holding company for the YETI brand of hard and soft coolers, outdoor living products, and drinkware. YETI initially filed for an IPO in 2016, only to withdraw its application in 2018, citing “market conditions.” At the end of trading June 10, YETI Holdings (NYSE: YETI) was selling at $25.31.

  • #20: Forty Seven

    - IPO offering price: $16
    - Closing price at end of first day: $15.05
    - Share price drop on IPO's first day: 94.06%

    Forty Seven is a pharmaceutical company committed to creating checkpoint therapies to develop macrophages for the fighting of cancer. Macrophages serve to swallow and ingest abnormal and invading cells, permitting the mobilization of T cells, antibodies, and other components of the immune system. The company's signature effectively blocks cancer cells' ability to cloak themselves, leaving tumors exposed to destruction by the macrophages. At the end of trading June 10, Forty Seven (NASDAQ: FTSV) was selling at $10.99.

  • Tie-#19: Applied Therapeutics

    - IPO offering price: $10
    - Closing price at end of first day: $9.40
    - Share price drop on IPO's first day: 94%

    Applied Therapeutics is a biopharmaceutical company that seeks to create “transformative, life-changing treatments for the patients who desperately need them.” The company's methodology is to target the molecules and pathways that have been shown to lead to debilitating diseases. At the end of trading June 10, Applied Therapeutics (NASDAQ: APLT) was selling at $9.90.

  • Tie-#19: Medalist Diversified REIT

    - IPO offering price: $10
    - Closing price at end of first day: $9.40
    - Share price drop on IPO's first day: 94%

    Medalist Diversified REIT is a commercial real estate portfolio holder, managing properties in Virginia, North Carolina, South Carolina, Georgia, Alabama, and Florida. The company invests in anchored-retail, industrial, multi-family, and limited service hotel properties. At the end of trading June 10, Medalist Diversified REIT (NASDAQ: MDRR) was selling at $4.64.

  • #17: Neon Therapeutics

    - IPO offering price: $16
    - Closing price at end of first day: $15
    - Share price drop on IPO's first day: 93.75%

    Neon Therapeutics is a biopharmaceutical company that uses neoantigen-targeted therapies to combat cancer. Neoantigens are toxins or foreign substances created by the genetic mutations from the presence of cancer. As normal cells do not have neoantigens, these substances can be used as a target by drug platforms to attack cancerous tumors. At the end of trading June 10, Neon Therapeutics (NASDAQ: NTGN) was selling at $5.22.

  • #16: New Fortress Energy

    - IPO offering price: $14
    - Closing price at end of first day: $13.07
    - Share price drop on IPO's first day: 93.36%

    New Fortress Energy is a clean energy generation company. It funds, builds, and manages natural gas infrastructure as turnkey solutions for industries and local communities. At the end of trading June 10, New Fortress Energy (NASDAQ: NFE) was selling at $10.

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