Shares of the three tech companies that recently conducted initial public offerings — including two unicorns — turned mixed after declining early Thursday, showing signs that the initial rush of excitement about their deals was fading.
Klaviyo, the digital-marketing company
KVYO,
was last up 2%, after closing up 9.2% Wednesday in its trading debut.
Klaviyo, like Instacart
CART,
CART,
earlier this week, opened more than 20% above its issue price but failed to hold those gains through the close.
It was the same Tuesday when shares of grocery-delivery app Instacart, which trades as Maplebear, rose 40% above their issue price before paring gains to close the day up 12.3%.
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Instacart was in the “right place at the right time” during the pandemic, but Needham analyst Bernie McTernan said he doubts the path forward will be as easy for the grocery-delivery company. Needham, which did not work on the IPO, initiated coverage of Instacart with a hold rating, the first analyst to set a rating on the stock. The stock briefly fell below its IPO issue price of $30 on Wednesday and was trading at $30.58 on Thursday.
Arm Holdings PLC
ARM,
meanwhile, opened 10% above its issue price last week before extending gains to close up 24.7% on its first day of trade. But Arm has languished since then and was down 3.7% Thursday and just above its issue price of $51.
Klaviyo and Instacart are both venture capital-backed tech companies that were valued at more than $1 billion before their deals, the threshold to be deemed a unicorn.
These stocks debuted after a dull period for IPOs., The IPO market — while better than in 2022, when it was all but frozen — is still showing far less activity than in the year before the pandemic. There have been 75 IPOs this year, up 19% from a year ago, according to Renaissance Capital, a provider of institutional research and IPO exchange-traded funds. Still, that’s well below levels seen in frothier times.
Alex Wellins, co-founder of the Blueshirt Group, an IPO advisory and investor-relations firm, said Klaviyo’s debut could do more to set the tone for tech companies thinking about going public.
“Arm is an extraordinarily large company,” he said. “Instacart has been well known by investors for a long time. Klaviyo, arguably, is more of a typical software company that has grown primarily organically, and it fits a more normal software and SaaS profile,” he said, referring to software-as-a-service platforms.
“So we believe this will be instructive for investors,” he continued. “Assuming it gets a strong reception, we believe it’ll be instructive for other software and SaaS businesses that are considering going public.”
Read: Klaviyo IPO: 5 things to know about the digital marketer trying to cut through the spam.
The Renaissance IPO exchange-traded fund
IPO
has gained 29% in the year to date, while the S&P 500
SPX
has gained 14.7%.
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Additional reporting by Bill Peters and Tomi Kilgore
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