The IPO birthing process is never easy.
Companies need to justify their valuations to jaded institutional investors that won't buy in unless they believe that they can unload their positions for even more later.
Dave & Buster's was a casualty last week. The operator of super-sized restaurants with large arcades called off its IPO on Thursday night just before it was expected to price.
This has been a good summer for restaurant IPOs. Sure, Carl's Jr. parent CKE Restaurants called off its debut in August, but fast-growing Mexican casual dining chain Chuy's (CHUY +0.00%) has seen its stock more than double since going public at $13.
It didn't help that while each of the 52 Dave & Buster's restaurants that were open for at least a year were cash flow positive, the company itself posted a loss in each of the three past fiscal years. The company was profitable in its most recent quarter, but the history of red ink -- and concerns about how the model would play out now that Dave & Buster's is opening smaller stores in smaller markets -- apparently didn't sit well with potential buyers.
However, six of the nine companies slated to go public last week did complete their exchange debuts.
| Company |
IPO |
Oct. 5 2012 |
Gain |
|---|---|---|---|
|
Fleetmatics (NYSE: FLTX) |
$17 |
$22.30 |
31% |
|
Berry Plastics (BERY +0.00%) |
$16 |
$15.00 |
(6%) |
|
Regulus Therapeutics (RGLS +0.00%) |
$4 |
$4.20 |
5% |
|
JAVELIN Mortgage (NYSE: JMI) |
$20 |
$19.75 |
(1%) |
|
LifeLock (LOCK +0.00%) |
$9 |
$7.32 |
(19%) |
|
Luxfer Holdings (LXFR +1.86%) |
$10 |
$11.02 |
10% |
Source: The Wall Street Journal.
Fleetmatics is a provider of cloud-based fleet management solutions. Berry Plastics makes plastic products and consumer packaging materials. Regulus is biotech upstart. JAVELIN will invest its proceeds in residential mortgage-backed securities. LifeLock is a leading provider of identity theft protection services. Luxfer manufacturers high-performance materials and gas cylinders.
LifeLock was a disaster out of the gate. The company wanted to price its stock between $9.50 and $11.50 a share. It had to settle for $9, and then the shares went on to close lower in each of its first three trading days.
The stock is bouncing back today, but will it stick? Maybe instead of identity theft protection there's a model out there brewing to protect companies from thievery of their IPO prices.
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