I.P.O.s for Krispy Kreme and Didi Chuxing Part of a Blockbuster Week
Nineteen initial public offerings hit the stock market last week, making it the busiest since 2004.
Krispy Kreme and Didi Chuxing were part of a blockbuster week for public listings.
A Krispy Kreme store in Times Square. The company raised $500 million in an initial public offering this week.Credit…Amr Alfiky/The New York Times
On any normal week, the trading debuts of Krispy Kreme or Didi Chuxing, the Chinese ride-hailing giant, would be the biggest news in initial public offerings. But they were just two of 19 sizable I.P.O.s that hit the markets last week, making it the busiest since December 2004.
The debuts are the latest example of companies racing to the public market to take advantage of sky-high valuations as investor exuberance pushes the stock market to new heights. And it’s a sign that, as regulatory scrutiny has slowed the process of going public by selling to the shell companies known as special purpose acquisition companies, or SPACs, companies are eagerly embracing the traditional route.
Overall, 213 I.P.O.s raised $70 billion in the first half of the year, which is above the full-year average for the past 10 years, according to Renaissance Capital. June was the busiest month for listings since August 2000.
“In addition to rising returns and a massive backlog of unicorns and others, companies are getting out ahead of the July 4 holiday,” said Matt Kennedy, a senior I.P.O. market strategist at Renaissance Capital, which manages I.P.O.-focused exchange traded funds.
Those who performed best out of the gate were generally companies that promised the same kind of growth propelling stocks like Uber Technologies, which has seen its shares rise 66 percent over the past year, and Zoom Video Communications, whose stock price has grown 48 percent.
Didi’s shares closed on Wednesday, their first day of trading, above their offer price, valuing the tech company at $69 billion. The company, which is considering expansion in Latin America, lost $1.6 billion last year, though it reported a profit of $30 million in the first quarter of this year.
But its first week as a public company hit a snag on Friday, after Chinese authorities said they were conducting a “cybersecurity review” of the company, with new user sign-ups suspended during the review. Didi’s stock closed down five percent on Friday, but remained above its I.P.O. price.
Shares of Clear Secure, the travel security company, surged higher on their first day of trading on Wednesday. The company used the pandemic to broaden its offerings for “touchless” screening, like allowing users to verify their identity through their eyes or face, and its Health Pass, which allows travelers to upload their vaccine information. Sales grew to $230 million in 2020, from $192 million the year prior.
“We think we have more opportunities today than we did before the pandemic,” said its chief executive, Caryn Seidman-Becker. The company ended the week worth around 50 percent more than its opening valuation.
On Wednesday evening, the plus-size apparel retailer Torrid topped its expectations, raising $231 million in an initial offering. The business, backed by the private equity firm Sycamore Partners, saw sales dip slightly during the pandemic — to $973 million last year from a little over $1 billion in 2019 — but used the setback as a chance to accelerate its e-commerce transformation, like investing in curbside pickup. Seventy percent of Torrid’s business was online last year, up from 29 percent a year prior.
“We did use all that disruption to learn,” said the company’s chief executive, Liz Munoz. “Our business had already been blown up into a million pieces — might as well get creative.”
Not all debuts last week fared equally well. Krispy Kreme priced its offering below expectations, raising $500 million, down from $640 million.
“I think investors were kind of turned off because the proceeds are going to pay down debt, so it’s not a really growth deal,” said Josef Schuster, the founder of IPOX Schuster, a firm in Chicago that helps track performance of new listings.
The company’s sales grew 17 percent to $1.1 billion its latest fiscal year, up from $959 million the year before. Losses, though, nearly doubled, to $60 million from $34 million as the company expanded its attempts to buy out its franchisees.
The company’s shares, which trade under the ticker “DNUT,” jumped on Thursday, their first day of trading, but gave up some of the gains the next day, closing the week 12 percent up from the initial offer price.
“The big investment phase that we really did over the past five years is mostly behind us, and we’re really now just going directly into how do we really drive this business forward,” said Michael Tatterfield, the chief executive of Krispy Kreme.
JAB Holding, a European investment firm, acquired Krispy Kreme for roughly $1.35 billion in 2016, taking the company private after a long spell as a listed company, which included a series of accounting problems. The doughnut chain was added to a portfolio of consumer brands that now includes the sandwich shop Panera and the coffee chain JDE Peets. JDE Peets went public last year, while Panera is also considering a potential offering this year.