Q3 The Busiest Since 2014 For IPOs, Led By Unicorns, SPACs

The third quarter saw 86 companies go public via a traditional IPO. In the third quarter, 165 special purpose acquisition companies also raised funds.

Breaking Down IPO Trends: Health care and technology were the two largest sectors in the third quarter for funds raised.

Offerings were up 87% in the third quarter compared to the second quarter. The 86 IPOs were more than double the 38 that raised funds in last year's third quarter.

Overall, the third quarter saw a positive-to-negative ratio of 2.5-to-1 for positive vs. negative opens. This was down from the 5-to-1 ratio seen in the second quarter.

This marked the largest quarter for money raised since the third quarter of 2014, when Alibaba Group BABA raised $25 billion in the largest IPO ever.

Top Q3 IPO Performers: The top five performing IPOs on the basis of opening day performance were:

• Nkarta Inc NKTX, a biotech company, saw shares surge 204%.
• BigCommerce Holdings Inc BIGC, a software-as-a-service company, saw shares climb 183%.
• CureVac CVAC, a biotech company, saw shares rise 175%.
• Berkeley Lights BLI, a cell biology company, saw shares jump 134%.
• nCino Inc. NCNO, a software-as-a-service company, saw shares rise 129%.

Related Link: The 2020 IPO Outlook: 13 Offerings On The Docket

Top Q3 IPO Laggards: The worst five performing IPOs on the basis of opening day performance were:

• GeoVax Labs GOVX, a biotech company, saw shares drop 25%.
• Sun BioPharma Inc SNBP, a biotech company, saw shares fall 20%.
• VIA Optronics VIAO, an interactive display company, saw shares lose 20%.
• Rackspace Technology RXT, a cloud services company, saw shares drop 20%.
• Siyata Mobile SYTA, a communications company, saw shares drop 17%.
• The Largest Q3 Raises: In the third quarter, 11 companies and SPACs raised $1 billion or more through traditional IPOs.
• Pershing Square Tontine Holdings PSTH, a Bill Ackman-backed SPAC, raised $4 billion. The SPAC opened 5.5% above its pricing.
• Snowflake Inc SNOW, a cloud-based data company, raised $3.4 billion. Shares opened 104% higher than the offering price.
• KE Holdings BEKE, a Chinese real estate company, raised $2.1 billion. Shares opened 75% higher than the offering price.
• Rocket Companies RKT, an online mortgage company, raised $1.8 billion. Shares opened at their IPO price of $18.
• Churchill Capital Corp IV CCIV, the fourth SPAC from Michael Klein, raised $1.8 billion. Shares opened slightly above their offering price.

Unicorns Lead the Way: The third quarter saw 10 unicorns with valuations of more than $1 billion hit the public market via IPOs. Snowflake, CureVac, Sumo Logic Inc SUMO, JFrog FROG, Good Rx Holdings GDRX, KE Holdings, Chindata Group CD and Xpeng Inc XPEV all went public in the third quarter.

All 10 unicorns saw their share prices increase on opening day, with an average opening day gain of 60%.

What’s Next For IPOs: The SPAC trend continues to heat up and could help the fourth quarter in terms of the number of offerings and the money raised. 

A number of unicorns like Airbnb could go public before the end of the year.

The Renaissance IPO ETF IPO has seen shares increase 80% in 2020.