And just like that, Trulia (NYSE: TRLA) became the market's latest busted IPO.
Shares of the popular real-estate website operator surrendered 30% of their value last week. In its first quarterly report since going public at $17 a share two months ago, Trulia posted a widening deficit.
Yes, Trulia's actual performance may have slightly exceeded expectations. However, given the stock's lofty valuation -- and a disappointing report earlier in the week by rival Zillow (Z +1.10%) -- investors just wanted out of portals specializing in residential real estate.
Zillow's report was worse. It shocked investors with guidance calling for a sequential dip in revenue for the current quarter. Trulia's outlook is for revenue to actually improve sequentially. However, when a niche grows out of favor, it's really out of favor.
It also didn't help that it was a brutal week for stocks. The S&P 500 shook off 2.4% of its value. When the market's weak, it's no surprise to see some of the newer stocks take the brunt of the rejection.
Trulia wasn't the only recent debutante to fall sharply last week. Let's take a look at some of the other recent IPOs that dealt shareholders double-digit losses last week.
|
IPO Price |
Nov. 9 Price |
Last Week's Loss | |
|---|---|---|---|
|
Trulia |
$17 |
$15.15 |
(30%) |
|
Groupon (GRPN +19.97%) |
$20 |
$2.76 |
(28%) |
|
Roundy's (NYSE: RNDY) |
$10 |
$4.19 |
(26%) |
|
Bazaarvoice (BV +0.00%) |
$12 |
$10.10 |
(20%) |
|
Chuy's Holdings (CHUY +0.00%) |
$13 |
$21.44 |
(15%) |
Source: Wall Street Journal.
Groupon has been a disaster since going public at $20 late last year, and last week's dismal quarterly report has now sent the shares 86% lower since last November's IPO. The report was horrendous. Forget the operating profit and the 32% spike in revenue that Groupon hoped the market would swallow. The only reason revenue is growing is because the company recently began selling actual closeouts. Groupon Goods props up revenue but at thin margins. Back out Groupon's direct revenue, and it was flat year over year and down 16% since the second quarter.
Roundy's is a grocery store operator, and it's not doing so hot. It posted flat revenue on a 3.6% decline in same-store sales in its latest quarter. Profitability was cut in half, but the real drag on the shares is that Roundy's is slashing its dividend rate by 48%. That still leaves investors collecting a chunky 11.5% yield, but there will be more payout cuts if Roundy's can't turn its business around.
Bazaarvoice proved a bizarre choice after announcing a new CEO, an acquisition, and uninspiring guidance.
Finally, we have Chuy's, the only name on this list of losers that continues to trade above its IPO price. The chain of casual Mexican restaurants is the company here that didn't release any negative news last week. It did file the 10-Q for its third quarter on Wednesday, but there were no minefields there. The financials had been released a week earlier.
I visited the chain's first Florida location this summer, walking away impressed (and full). However, given its rich valuation relative to other restaurant chains, it isn't a surprise to see the stock, being a recent IPO, take a bigger fall than the general market.
It happens. If the market bounces back this week, expect plenty of recent IPOs to do the same.
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