Tomorrow will be an interesting day for Wall Street's rookies. At least five of last year's debutantes will step up to deliver their quarterly reports.
This is unusual for a few different reasons.
- We're already pretty late into earnings season.
- There weren't that many companies that dared to go public in 2011.
- Many of the recent debutantes checking in tomorrow are trading below their IPO prices.
Since many of the members of the 2011 IPO class haven't had too many chances to prove themselves worthy through quarterly reports, tomorrow will be a big day. A good or bad earnings report will move the shares to a greater degree than investors see for companies that have been trading publicly for years.
Bring in the freshmen
If you have your fraternity paddles ready, let's bring in the newbies that will be strutting their stuff for us tomorrow.
Feb. 17, 2012
Angie's List runs a growing premium website where members can get vetted reviews and referrals for local services. The company went public at $13 three months ago and popped to $18 at the open, but it has meandered in the mid-teens for most of its publicly traded life.
Qihoo 360 is a Chinese provider of anti-virus software and other Web-based programs. The Beijing-based company has done everything right since going public nearly a year ago. It has not only beaten Wall Street's profit targets in its first three quarterly reports since its IPO -- Qihoo 360 has blown them out of the water. We're talking about besting analyst estimates by at least 50% in each of the three periods. The market usually turns market beaters like Qihoo 360 into darlings, but the stock is only trading barely 20% higher than last March's offering price.
HomeAway is no stranger to folks who have been seeking a place to stay while on vacation but want more space and local color during their getaways. Its namesake site and its equally popular VRBO.com let property owners rent out their vacation homes and other vacant digs to travelers.
Skullcandy makes headphones and earbuds that come in funky designs and vibrant colors. It began by marketing its audio gear to extreme sports enthusiasts, hence the edgy approach. Skullcandy is heavily shorted, as many investors bet that audio is a cutthroat niche.
Yandex is Russia's leading search engine. It was holding up above its IPO price until its CEO visited with a few analysts. They asked him about the search engine recently yielding some of its market-leading market share, and his cautious outlook spooked the analysts.
The stock took a hit on the news. Investors also criticized Yandex for the selective disclosure implications of providing what many interpreted as disappointing guidance to just a handful of visiting analysts. Yandex has been a busted IPO ever since.
The short road to redemption
HomeAway, Skullcandy, and Yandex are now trading below their original offering prices. That's embarrassing to the companies, the lead underwriters, and the first wave of retail investors.
The good news is that all three of the companies are expected to post profitable quarterly results. Of the five rookies on the earnings stage tomorrow, only Angie's List is expected to check in with a deficit. Company watchers don't see Angie's List turning an annual profit until 2014.
The reports will move the stocks, either on Wednesday for those reporting in the morning or on Thursday for those chiming in after the market close. The market has underestimated these recent debutantes, so don't be surprised if most of these names move higher later in the week.
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Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.