Tradeweb shares jump in latest test for crowded IPO market on Wall Street this year

Trader Talk

Tradeweb Markets, an electronic trading platform backed by Blackstone, went public Thursday morning at $27 but opened on the Nasdaq at $34.26, a significant premium. Original price talk of 27.2 million shares at $24 to $26 was twice raised, eventually settling at 40 million shares at $27.

“The IPO trend is definitely up, companies are looking to price at the high end of the range, or better,” said Santosh Rao, who follows IPOs as Head of Research for Manhattan Venture.

Two other smaller IPOs — medical device maker Silk Road Medical, and diabetes biotech firm NGM Bio, both also priced at the high end of their ranges. Like Tradeweb, Silk Road significantly increased the size of its offering, from 4.7 million shares at $15-$17, to 6 million shares at $19-$20, and then priced at $20.

The much-anticipated IPO rush started with jeans legend Levi Strauss, which went public on March 21 at $17 and is still trading well above its initial price, just below $22.

But ride-sharing firm Lyft has taken investors on a roller-coaster, pricing last week at $72, a significant premium to original talk of $62-$68. Since then, it has traded as high as $88 and as low as $62 and is now trading close to its $72 original price.

This is not a normal year for IPOs. There is a tremendous amount at stake for Wall Street, for the slate of tech unicorns that are seeking to go public (including Pinterest, Uber, Airbnb, WeWork, and Palantir), and for the investing public.

About 230 companies are slated to go public this year, according to Renaissance Capital, which advises clients on IPOs and runs the Renaissance Capital IPO ETF, a basket of roughly the last 60 IPOs.

Depending on market conditions, the value of all those companies could be between $700 billion and $1 trillion. The amount sold to the public could top $100 billion, which would surpass the record $96 billion raised in 2000.

On the one hand, conditions are perfect: the markets are close to new highs, the Renaissance Capital IPO ETF is up over 30 percent this year, one of the best performing ETFs.

Yet, the sheer number of ETFs that are going to be coming have left investors–those who will be buying this tidal wave —a bit nervous.

The early signs are good— is Lyft an anomaly? “It seems Lyft was the only one to price too high, maybe the original price of $62-$68 would have been better,” Rao said.

The message to the bankers from investors, Rao said, is “You don’t have a free ride, there is a limit to how far you can go.”

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