Five companies went public via IPO in the second quarter with terrible results
Per tech analyst Tiernan Ray, only five companies went public via IPO in the second quarter — compared to 29 in the same quarter of 2021. The five companies that went public are down an average of 63%.
The quality of the companies is questionable — they’re all micro-cap companies you’ve never heard of…
- Lytus Technologies (NASDAQ:LYT) operates a cable service in Mumbai and is getting into the telemedicine biz.
- Expion360 (NASDAQ:XPON) makes lithium batteries for boats and campers — and soon-to-be electric forklifts.
Not right now: Large companies pushed plans to go public, and who can blame them? Their stocks would be destroyed in such an environment.
- Ray says buying companies on the first day they go public is a terrible idea, and we couldn’t agree more.
- Big or small, tech IPOs historically underperformed the market average in the first five to six months.
Large companies with plans to go public by merging with SPACs have also pulled out of their deals. Trading platform eToro and food chain Panera Bread recently abandoned plans to go public.
Bankruptcies incoming: Lower-quality companies that already went public through the SPAC route are running into trouble.
- Last week, Enjoy Technology (NASDAQ:ENJY) — which runs “mobile retail stores” — filed for bankruptcy after going public less than a year ago.
- Enjoy — founded by the co-creator of Apple’s retail arm — is literally someone coming to your house and selling you tech products.
Sixty-five companies that went public through a SPAC are now trading at less than $1 and will need more cash next year to continue operating.
More bankruptcies are likely on the way, and it might not be such a bad thing. Garbage in, garbage out.