initial public offerings (IPOs) trading on American exchanges

Sunday, October 30, 2011

Low-float IPOs

Selling a Sliver

In their IPOs, many Internet companies offer only a fraction of their equity to outside investors. Such a tactic helps support stock prices by keeping supply low. While Groupon's revenues have risen sharply, profits are elusive.
GrouponHomeAwayLinkedInPandora MediaZillow
Recent Price*$17.0037.3287.2314.8230.77
Change Since IPONM38.2%93.8-7.453.8
Shares Offered In IPO (mil)308.07.814.73.5
% of Shares Outstanding4.7%
Market Value (bil)$
2011E Revenue (mil)$1,90022750627262
2011E EPS-$0.610.460.02-0.060.13
*At midpoint of pricing range. E=Estimate.
Sources: Thomson Reuters; Susquehanna Financial Group; Morningstar

Saturday, October 29, 2011

2011 IPO update

  • (10/29/11) The IPO pipeline: There are 211 IPOs attempting to raise $52 billion, one of the largest pileups of deals in decades, says Renaissance. There have been just two IPOs since mid-August: a cosmetic medical company, Zeltiq Aesthetics, and wireless networking company, Ubiquiti Networks.
  • Zeltiq (ZLTQ) and Ubiquiti Networks cut their price ranges 13% and 29%, respectively, from their original ranges, which made them more appealing to investors. Both deals are up more than 15% from their IPO prices.
  • USA: Only 98 IPO deals priced so far this year, with 28 of them from small companies
  • Globally: In the third quarter of this year there were 284 Initial Public Offerings. The Asia Pacific region accounted for 57% of these IPOs (source: Ernst & Young)
  • 215 IPOs have been withdrawn or postponed globally so far this year (as of 9/11)

Top underwriters:
  1. Goldman Sachs: 6.8% market share, 39 deals (as of 9/11)
  2. Morgan Stanley" 6% market share, 50 deals (as of 9/11)

Friday, October 28, 2011

Zeltiq Raises Net Proceeds Of $89.3 Mln In IPO

Zeltiq Aesthetics, Inc. (ZLTQ) said Monday that it has completed its initial public offering of 8.05 million shares of common stock at a price of $13.00 per share.

The amount sold includes 307,000 shares sold by selling shareholders. The shares began trading on October 19 on The Nasadaq Global Select Market under the ticker symbol "ZLTQ."

The company raised net proceeds of about $89.3 million from the sale of 7.743 million shares of its common stock. The company did not receive any of the proceeds from the sale of the shares offered by the selling shareholders.

What is Zeltiq?

Zeltiq is an FDA approved technology that uses cold therapy to freeze and destroy fat cells, with no surgery required. It is also called cryolipolysis and is a pain free method to rid yourself of fat in specific areas.

How does Zeltiq work?

Zeltiq uses precisely controlled, targeted cold therapy in a treatment that lasts about one hour per treatment area. The skin to be treated is suctioned between two cooling plates which modify the fat's temperature to just above freezing. Energy is extracted from the fat cell by the cold, causing it to die. Though it is referred to as cryolipolysis, it is not actually "freezing" the fat or the surrounding tissues. Rather, it crystallizes the lipids in fat cells causing the slow collapse of cells as they die. The procedure targets only fat cells and only those in the superficial fat layer close to the skin. The body then carries off the dead cells over the course of two to three months for a more gradual, natural result.

Wednesday, October 26, 2011

KiOR (KIOR) looks like a buy

KiOR is a next-generation renewable fuels company that has developed a process to convert forest-based biomass into renewable crude oil for the transportation sector. It aims to access the $2 trillion global transportation fuels market while also benefiting from government programs, such as the US Renewable Fuel Standard. Each of the top 10 oil refiners in the US, who account for 70% of total capacity, will be required to purchase at least $1 billion worth of renewable fuels per year by 2022.

Founded by Khosla Ventures (KV) in 2007, the cellulosic fuels company now has Condolezza Rice on its board of directors. KiOR priced shares at $15 at its IPO in June but completed its initial public offering for 10 million shares a little lower, raising $137.5 million. It claims advantage over rivals in that it derives its fuels from wood and agricultural waste, while avoiding feedstocks such as corn or soy.

KiOR has signed an offtake agreement with Catchlight Energy LLC (CLE), a joint venture between subsidiaries of Chevron and Weyerhaeuser Company, which will supply forestry-based feedstocks for KiOR's first commercial renewable fuel facility in Columbus, Mississippi, due to start production in the middle of next year.

Tuesday, October 25, 2011

Glori Energy files for IPO of up to $115 mln

Oct 5 - Glori Energy Inc, which uses biotechnology to release oil trapped in reservoirs, filed with U.S. regulators on Wednesday to raise up to $115 million in an initial public offering of its common stock.

* Credit Suisse, UBS, Piper Jaffray lead underwriters

* Intends to list under "GLRI" on NASDAQ

The company said it planned to use the net proceeds from the offering for general corporate purposes, which may include the acquisition, restoration and operation of low-producing oil fields.

The Houston-based company told the U.S Securities and Exchange Commission in a preliminary prospectus that Credit Suisse, UBS investment bank, Piper Jaffray and Robert Baird & Co were underwriting the IPO.

Investment company GTI Group and Energy Technology Ventures -- a joint venture of General Electric Co GE.N>, ConocoPhillips and NRG Energy Inc -- are some of the biggest stakeholders of Glori.

The company, which did not reveal how many shares it planned to sell or their expected price, intends to list its common stock on the Nasdaq under the symbol "GLRI".

Monday, October 24, 2011

China’s Amazon Eyes $5 Billion U.S. IPO

China’s answer to is targeting a U.S. initial public offering of up to $5 billion next year, despite U.S. investor wariness toward Chinese firms.

A decision by Beijing-based online retailer Jingdong Mall to shun the Hong Kong market, the most popular venue for Asian firms, may be a bet that Internet investors are savvier in the U.S. and may be more willing to give the company a heftier valuation. Asia has few large Internet stocks. The IPO, if it materializes, would be far larger than the listing of Google Inc., which holds the record for the largest U.S. Internet IPO at $1.9 billion in 2004, and of Internet-related offerings elsewhere in the world.

The company, also known by the name of, plans to raise $4 billion to $5 billion in an IPO tentatively scheduled for the first half of 2012, according to IFR, a Thomson Reuters publication.

An IPO of that size would surpass Google's (GOOG) $1.9 billion IPO in 2004 as the largest-ever Internet float in the United States, according to Thomson Reuters data.

Jingdong is scheduled to hold a "beauty parade" next week in Beijing to pick underwriters for the IPO, IFR said on Wednesday, citing sources familiar with the matter.

One of the sources said the IPO could exceed $5 billion, depending on its final timing.

The ramp-up to the IPO comes as the U.S. IPO market has been struggling amid volatility triggered by Europe's debt crisis and a weak domestic recovery. A number of deals were withdrawn last month.

It also comes as some U.S.-listed Chinese companies -- mainly those that listed on U.S. exchanges via reverse mergers -- have been tainted by allegations of fraudulent accounting.

"Right now, U.S. investors are very cautious about Chinese IPOs. The fact that some of those IPOs like Longtop ... basically have defaulted in the last few months -- obviously that taints the waters for all of the other Chinese IPOs," said Josef Schuster, founder of Chicago-based IPO research and investment firm IPOX Schuster.

The IPOX China 20 Index .IPCT of Chinese companies that recently went public is down about 24 percent since its peak in April, underscoring skittish investor sentiment.


While China's e-commerce market is growing alongside its middle class, making it an attractive business opportunity, the market is highly fragmented and competitive. Jingdong competes not only with Taobao Mall (, but also with E-Commerce China Dangdang Inc (DANG).

Established in 2004, Jingdong is China's second-largest online retailer behind Taobao, according to the latest Analysys International research.

Some analysts are skeptical about the ability of Chinese e-commerce companies to make a profit in the near term as the market is hugely fragmented.

Jingdong has about 15 million registered users. It is not currently profitable, but founder and CEO Liu Qiangdong has said the company is expected to become profitable in the second half of 2012.

Jingdong's revenue is expected to reach 28 billion yen ($4.4 billion) by the end of 2011, up from 10 billion yen at the end of 2010.

Jingdong raised $1.5 billion in a third round of funding in April, which valued the company at $10 billion, IFR said. Russia's Digital Sky Technologies and Tiger Fund are among the investors in the company.

Jingdong could not be reached for an immediate comment.

Before the accounting frauds, U.S.-listed Chinese Internet stocks were a big hit among investors.

Chinese social network company Renren (RENN) traded at nearly 80 times annualized sales in 2010 when it went public in May, with other Internet companies such as International Ltd (DATE) and NetQin Mobile Inc (NQ) also trading at high valuations, analysts said.

Saturday, October 22, 2011

Study: IPO boom may not come back

The sputtering initial public offering market may never again be as robust as it once was because there's much more incentive for the owners of growing, young companies to sell out than to go public, suggests one study.

"I am of the opinion that venture capitalists will not be taking many companies public for the foreseeable future, even if the stock market rallies," says Jay Ritter, a University of Florida finance professor and co-author of the paper "Where Have All the IPOs Gone?".

The lack of IPOs would be a concern because economists say fast-growing, young firms are more likely to add jobs than established older corporations.

And this has already been a challenging year, with companies folding their IPO plans in record numbers. Only two firms, Zeltiq Aesthetics and Ubiquiti Networks, made market debuts since mid-August. It also remains to be seen how investors will receive a high-profile offering from daily deals website Groupon, expected to start a roadshow next week.

Ritter says compared to the heyday levels of the 1980s and 1990s, IPO activity has been slow for a decade and is bound to stay that way because of structural changes in the economy.

On average, 103 companies went public every year between 2001 and 2009 compared to an average of 311 firms between 1980 and 2000, says the study, which was co-authored by Xiaohui Gao of University of Hong Kong and Zhongyan Zhu of Chinese University of Hog Kong.

The IPO volume has been especially low for small firms with annual sales of less than $50 million.
Many have blamed the prolonged decrease in IPO activity on additional compliance costs imposed on publicly traded firms by Sarbanes-Oxley Act of 2002 and a decline in the number of analyst covering smaller companies.

Ritter's study offers an alternative explanation, attributing the drop in number of IPOs, particularly from small firms, to structural changes in the economy that have given large companies the advantage of economies of scope and ability to bring products on the markets faster.

This in turn has reduced the profitability of small companies, making it much more attractive for them to sell out to bigger firms rather than go public.

To illustrate the point, the study looks at Apple's ability to quickly launch or update its iPads and iPhones. "No small independent company could implement new technology so rapidly and sell tens of millions of units to consumers in a matter of months," argues the study.

It goes on to say: "A small private company that develops valuable new technology for consumer electronics would find that its value-maximizing strategy would be to sell out to Apple rather than go public and start hiring more workers."

The study also notes that there has been a dramatic decline in the number of small firms that are profitable within three years of an IPO. It also points out that investors in small company IPOs saw disappointing returns over the last three decades.

The study says another period of high IPO volume is possible, "if "irrational exuberance" pervades the market, or if one or more exciting new technologies develop that result in many small and independent firms becoming profitable."

But this would be "just a temporary phenomenon", concludes the study.

Only 98 IPO deals priced so far this year, with 28 of them from small companies, according to Renaissance Capital. And more than one-third of the withdrawn IPOs were from small firms.

Thursday, October 20, 2011

Wednesday, October 19, 2011

Great trade: Kips Bay Medical (KIPS) went up 43% in 2 days

  • 9/25/15: Kips Bay Medical Inc. stock has ceased trading after a vote by shareholders this week to wind down operations because of disappointing results from testing of its sole medical device.


KIPS gained 43% since my recommendation just two days ago: Kips Bay Medical (KIPS) looks like a buy

Here's how the chart looked on Monday October 17:

Sequans Communications (SQNS) looks good today

Tuesday, October 18, 2011

Cempra plans $86 million IPO

Oct. 13--Cempra Pharmaceuticals, a Chapel Hill company that is developing treatments for drug-resistant skin infections and pneumonia, plans to raise as much as $86.3 million in an initial public offering of stock.
The company filed plans with the Securities and Exchange Commission Wednesday.
Cempra has two antibiotics in clinical trials.
One targets patients with pneumonia. The other is being tested as a treatment for skin infections, including methicillin-resistant Staphylococcus aureus, or MRSA.
The company's founder and CEO, Prabhavathi Fernandes, is a microbiologist who was involved in developing clarithromycin, a popular antibiotic used for sinus infections, bronchitis and pneumonia.
Cempra raised $46 million in venture capital in May 2009. The company has attracted $78.4 million since it was founded in 2006.
Cempra is just the latest IPO proposed by a Triangle health care business.
Argos Therapeutics, a Durham company developing experimental medicines to treat kidney cancer, HIV, lupus and other diseases, filed plans in July to raise as much as $86.3 million in an initial public offering of stock.
LipoScience, a Raleigh company that sells a blood test to check patients' risk of heart disease, filed IPO plans in June.

Groupon undercounting number of times a deal is purchased

Oct. 10--Groupon has stopped displaying the exact number of daily deal vouchers purchased on its website, a move the Chicago-based company said was to foil outside attempts to estimate its total sales.
In the past, each Groupon Web page for an individual deal would show how many coupons had been sold. The new format now says "over" a certain number has been sold. For example, Chicago's featured deal on Monday for Lakeview ice cream parlor Bobtail says "over 1,800 bought."
Groupon spokeswoman Julie Mossler posted an explanation of the changes on the company's official blog and said the intention was to make it "clearly impossible to predict our sales." The new format should be rolled out site-wide within a few weeks, she said.
"As customers, we like the counter because it indicates how popular deals are," Mossler wrote. "But some clever people are using the counter to make (consistently in correct) estimates of our total company sales, which we don't like for the same reason you probably wouldn't like if people tried to guess your weight all day."
The change to the counter underscores Groupon's sensitivity to the constant scrutiny it has endured since filing for an initial public offering in June. Financial analysts, bloggers and other pundits have picked apart the company's financial statements and raised concerns about the viability of Groupon's business model. The company has amended its IPO documents several times, with one of those revisions containing a major restatement of revenue.
Because of "quiet period" regulations ahead of its IPO, Groupon is limited in how it can respond to criticism. But the company's irritation has surfaced in other ways. In an internal memo that was leaked to the press in August, Chief Executive Andrew Mason said he had recently read an article that made him realize "the degree to which we're getting the ***--kicked out of us in the press had finally crossed the threshold from 'annoying' to 'hilarious.'"

Zynga’s IPO is starting to raise eyebrows

The San Francisco-based developer of popular games like CityVille and FarmVille might see its valuation — once estimated as high as $20 billion — revisited. With each new updated filing, its proposed IPO is starting to look more problematic to some investors; however, unlike Groupon, Zynga is profitable.

There are still issues for Zynga, though, that are relevant to the marketplace, including its heavy reliance on Facebook as well as a drop in net income. In addition, some data show that daily usage of its games has slipped, and there are concerns about the control founder and Chief Executive Mark Pincus has over the business.

“Here is a company that has a 99% dependence on Facebook, and at first they wouldn’t disclose the nature of the contract,” said Sam Hamadeh, chief executive of, a New York-based firm that analyzes privately held companies and also has been critical of Groupon. “There were all sorts of things in the Facebook contract that when I read it and when other analysts read it were jaw-dropping.”

Facebook takes a whopping 30% of any revenue Zynga generates by the selling virtual goods users buy when playing its games.

Since its initial S-1 filing on July 1, Zynga has updated its IPO prospectus four times, and with each revised version, its financial statements seem less appealing. One of its updates, which included its second-quarter earnings, showed a big jump in costs of revenue, which almost doubled over six months, in part due to rising hosting costs and an increase in marketing spending.

Also in the second quarter, net income fell to $1.4 million, down from $13.9 million in the year-ago period, even though revenue continued to soar to $279 million, up from $130 million in the second quarter of 2010.

Zynga is making moves to wean itself off Facebook as a platform, where most of its customers play its games, and much was written about those plans last week. Zynga hosted the press Tuesday at its new headquarters to talk about its plans to build its own platform, providing customers an additional social playground, code-named Project Z.

A spokeswoman declined to comment about speculation about the company’s IPO. Pincus, who was a scheduled speaker at the Web 2.0 Summit Monday, canceled his appearance, citing the IPO quiet period.

Investors thinking about buying Zynga’s shares might also want to note that Pincus has cashed out a chunk of stock. In March, Zynga said it bought back $109.5 million worth of stock from the chief executive. In addition, it paid $70,000 in 2010 for security services for Pincus, and reimbursed him for the company use of an airplane he owns.

Monday, October 17, 2011

Kips Bay Medical (KIPS) looks like a buy

Vanguard Health Systems (VHS) - 3 months after IPO

Lone Pine Resources - 4 months after IPO

In July, J.P.Morgan has picked up coverage of Calgary-based Lone Pine Resources Inc. with a US$16 price target and Overweight rating, representing upside of more than 45%.

Analyst Katherine Lucas Minyard told clients the company offers investors exposure to a pure-play onshore Canadian natural gas-weighted resource base with high growth potential at an attractive discount. She also highlighted the upside possibility Lone Pine offers due to its increased crude oil production mix.

“Although we see near-term headwinds from high exposure to natural gas, a lack of operating history as an independent company, and the expected upcoming distribution of Forest Oil Corp.’s 82.3% stake, we believe the shares will capture broader market appeal through year-end as Lone Pine establishes an operating track record and the distribution overhang lifts,” Ms. Minyard said in a research note.

Colorado-based Forest Oil Corp. spun off its Canadian operations in June through an IPO of Lone Pine that raised US$183-million.

Lone Pine has an inventory of more than 2,600 drilling locations, with a focus on Western Canada’s Deep Basin.

Ms. Minyard noted its expected production growth of roughly 20% per year in 2011 and 2012, and the its ability to allocate more capital toward aggressive development as an independent company.

Natural gas accounts for an estimated 96% of Lone Pine’s total risked resource base ad 79% of 2011 production, which makes its near-term cash flow heavily dependent on natural gas prices. However, the company is pushing development of the Evi light oil play in Northern Alberta.

As a result, Ms. Minyard forecasts its production mix will shift from 21% liquids in 2011 to 29% in 2012, which will lead to a 70% increase in adjusted EBITDA.

Tuesday, October 11, 2011

Pandora Slow to Lure Mobile-Ad Dollars

Pandora's online music service is so popular among smartphone users that it’s the most- downloaded free music program on app stores. But that hasn’t won over mobile advertisers.

Oct. 11 (Bloomberg) -- Pandora Media Inc.’s online music service is so popular among smartphone users that it’s the most- downloaded free music program on Apple Inc.’s and Google Inc.’s app stores. So far that hasn’t won over mobile advertisers.

Pandora users are listening to more music on Apple’s iPhones and iPads and the devices that run Google’s Android operating system. While more than 70 percent of the service’s usage happens on smartphones and tablets, less than 1 percent of overall U.S. advertising spending is devoted to mobile devices.

Though the company draws larger audiences in New York and Los Angeles than those cities’ biggest radio stations, analysts don’t expect listener growth to translate into annual profit until fiscal 2014. With competition accelerating from music- streaming services Rdio Inc., CBS Corp.’s and U.K.-based Spotify Ltd., signs that advertisers aren’t spending much to reach mobile audiences have wiped 16 percent from Pandora’s stock since its June initial public offering.

“They just can’t sell advertising that fast,” said Mark Mahaney, an analyst at Citigroup Inc. in San Francisco, who recommends buying the shares. Users are “shifting so rapidly towards mobile devices, and it’s going to take longer for the monetization to pick up.”

Pandora shares gained 1.2 percent to $13.59 at 3:02 p.m. New York time. Deborah Roth, a spokeswoman for Pandora, declined to comment on the company’s mobile advertising trends.

Advertising Blends

The Oakland, California-based company is forecast to continue its rapid expansion. The service, which had 23 million active users in fiscal 2011, is projected to grow 21 percent annually and reach 159 million active listeners worldwide by fiscal 2021, Scott Devitt, an analyst at Morgan Stanley in New York, said in an interview. By 2021, users of the service will stream an average 18 hours of ad-supported music each month, up from 13 hours last year, he estimates.

The mobile service has struggled to attract marketers in part because Pandora is creating new types of advertising, blending 15-second audio clips, display ads and video spots. Audio ads on the radio have traditionally been directed to local audiences, while display advertisers are more often national brands. Pandora’s service is multimedia and focused on national and local advertisers, an experiment that most companies aren’t used to.

Short on Salespeople

The company also doesn’t have enough sales representatives to keep up with user growth, and in cities like Miami and Atlanta, it has no salespeople, said Chief Financial Officer Steve Cakebread.

“It’s really tough to grow our sales organization 125 percent year-over-year,” Cakebread said at a Goldman Sachs Group Inc. conference on Sept. 22.

In cities where Pandora has sales offices, including New York, Los Angeles and San Francisco, the company already averages more time with listeners than the biggest local radio stations, Devitt said, citing Pandora-supplied estimates and data from Arbitron Inc., a radio researcher.

Meanwhile, Pandora is subsidizing its mobile business by bolstering advertising on its website. Last month, it added new features including video commercials that command higher rates from advertisers compared with audio spots, Cakebread said. After subtracting licensing costs, revenue from Pandora listeners using computers is nine times higher per hour than from those on mobile devices, Devitt estimates.

Listening Cap

Along with the site redesign, the company lifted a 40-hour monthly cap on computer listening, which had required users to pay for a premium service if they wanted more hours. Previously, when the cap was reached, users would switch to listening on mobile devices. Any amount of listening is now free and ad- supported, a change that may add $53 million in revenue in the next four years, Devitt said in a Sept. 23 report. Removing the cap will also result in $11 million less in subscription fees, Devitt wrote.

The company needs that extra cash to deal with another challenge -- a growing field of rivals. CC Media Holdings Inc., the largest owner of U.S. radio stations, last month jump- started its iHeartRadio Internet offering with a series of concerts in Las Vegas. The service, available online and through applications on mobile devices, lets listeners create personalized playlists and listen to its broadcast outlets.

Pandora also faces new competition for listeners’ time from Spotify, operator of Europe’s biggest online music service, which in July began signing up U.S. customers for its ad- supported and subscription plans, and from Rdio, started by a co-founder of Skype Technologies SA, which on Oct. 6 began offering free music without advertising.

Free Service

The competition has unnecessarily dragged down Pandora’s stock price in recent months, because the service is free, and it has a vast music portfolio and a loyal audience, Mahaney said.

“You’d have to have a dramatically better mousetrap for somebody to switch away from a free service to a $10-a-month service,” Mahaney said in an interview. “The end market is a lot bigger for an advertising-supported model than for a subscription-supported model.”

Morgan Stanley’s Devitt agrees that it’s just a matter of time before ad dollars follow the users. Mobile revenue for each hour of music provided to listeners will almost double to $40 in 2016, topping the rising costs Pandora pays the record labels to license music, Devitt estimates. He says licensing fees will climb 35 percent to $23 an hour.

Advertising on mobile devices is expected to jump almost 12-fold from last year to $10.5 billion in 2015, compared with a 32 percent rise in overall U.S. ad sales to $328.6 billion, according to IDC data. Pandora is preparing for that surge by putting its service in front of as many music lovers as possible, even if it’s a currently a money-losing endeavor.

Pandora in Cars

Pandora’s lead over traditional radio will accelerate as its service becomes more widely available in automobiles starting with 2012 models, Devitt said. The company has deals with Ford Motor Co., General Motors Co.’s Chevrolet, Daimler AG’s Mercedes-Benz and Bayerische Motoren Werke AG’s BMW. Toyota Motor Corp. said Oct. 6 Pandora will be offered in its newest Camry and Tacoma vehicles. That presents an opportunity for mobile ad growth for Pandora even beyond smartphones.

“Pandora in every car is pretty powerful,” said Josh Felser, co-founder of venture firm Freestyle Capital in San Francisco, who previously sold music startup to AOL Inc. “People are still in their cars multiple hours a day and radio is the dominant way they listen to music. Pandora is going to dominate that market.”

Still, to satisfy investors, Pandora will have to make sure that its mobile advertising begins to catch up as smartphone and tablet listening grows and rivals push ahead.

“It’s a challenge for any company blazing a trail in a consumer space,” said Myk Willis, chief executive officer of Deerfield Beach, Florida-based Myxer, a mobile-entertainment company that will offer an Internet radio service this year. “When you’re driving consumer growth in a category that is relatively new, ad dollars always flow slowly into that space.”

Saturday, October 1, 2011