This is shaping up to be a good week for after-hours traders. Yesterday's post-market scene was full of late-breaking news, and it's the same for tonight.
We have new developments from a high-profile company that's soon to launch its initial public offering (IPO), a famous name selling out of what's effectively a subsidiary, and the latest quarterly results from a struggling retailer. So without further ado...
Peloton seeking over $1 billion in IPO
Arguably the hottest upcoming IPO -- that for exercise tech specialist Peloton -- now has a price tag. The company's IPO price will be $26 to $29 per share, it revealed in a new regulatory document filed after market hours. Within that range, the 40 million shares being sold in the issue would reap gross proceeds of $1.04 billion to $1.16 billion.
Founded in 2012, Peloton has become a trendy company among fitness aficionados. This is due largely to a rather innovative offering -- Peloton not only sells the stationary bikes and treadmills that are its core products, but also subscriptions to its digital library of exercise classes.
Peloton, which will trade on the Nasdaq under PTON, filed its initial IPO paperwork last month. The date of the issue has still not been set. Typical for a relatively young and tech-leaning company, it has not been profitable on an annual basis lately. However, revenue has been rising steeply (it more than doubled last year, to $915 million), the company's debt burden is light, and its business model is fresh and compelling. Look for the stock to be a hot item once it begins trading.
The Peloton IPO's underwriting syndicate is a Who's Who of investment banks. It's being led by Goldman Sachs and JPMorgan Chase unit J.P. Morgan.
GE ceding control of Baker Hughes
One-time top stock General Electric (NYSE:GE) is selling out of its majority holding in a big asset. It will effectively release its grip on oil-field services specialist Baker Hughes, a GE Company (NYSE:BHGE).
GE and several affiliated entities are selling 105 million shares of Baker Hughes Class A common stock in a secondary share offering. This stake comprises 20% of outstanding shares.
Additionally, Baker Hughes said that it has agreed to buy $250 million worth of Class B shares from GE and the affiliates. Since that amount is roughly equivalent to the current share price, it seems Baker Hughes is purchasing most or all of the stake.
Upon completion of the sale, GE will no longer hold over 50% of the voting power in Baker Hughes -- presumably, control will return to the latter company. As a result, GE's representation on the Baker Hughes board of directors would fall to one seat from the present five. Prior to the sell-off, GE had held over 62% of Baker Hughes; this will fall to under 40%.
The timing of GE's sales was not specified.
GE is a company that's struggling to recover from its unsuccessful venture into financial services during last decade's financial crisis. This is one of several recent divestments, which are part of a clear effort to shore up its finances. However, due to a decline in Baker Hughes' stock price, GE will have to book an accounting loss of around $7.4 billion in this move.
GE's stock is trading sideways tonight. That of Baker Hughes is down by nearly 4%.
GameStop flops in Q2
It's hard to be a company heavily reliant on brick-and-mortar stores these days. It's harder if you sell video games, products that many customers simply download from the comfort of their own machines.
Case in point: GameStop (NYSE:GME), which reported troubling Q2 of fiscal 2019 results after the closing bell tonight. The video game retailer's net sales fell by 14% on a year-over-year basis to land at $1.29 billion, on the back of a 12% slide in same-store sales. Meanwhile, non-GAAP (adjusted) net loss deepened to $32 million ($0.32 per share) from the Q2 2018 shortfall of $10 million.
Even with the fairly modest performance analysts were expecting, GameStop still missed the average estimates. Prognosticators were collectively modeling $1.34 billion on the top line for the company, and an adjusted net loss of only $0.20.
Very little is going well for GameStop now. The company is still some distance away from the latest upgrade cycle in consoles. Even though it'll likely enjoy some benefit from increased hardware sales, this might not provide the growth juice some investors are hoping for. On top of that, the company continues to sink under the weight of powerful e-commerce competitors.
Investors are very cold on GameStop this evening. The company's shares are trading down by 16%.