For the second week in a row, investors will be spoiled for choice in the IPO space. Between now and Friday, seven issues are slated to make their market debuts, and nearly all are poised to take in more than $50 million in proceeds. This week's new stocks are mixed not only in terms of sector, but also in nation of origin (one of our picks, Jumei International Holding, hails from China).
Before we turn the spotlight onto our selections, though, we need to emphasize that IPO investing carries above-average risk, as initial stock prices can be far from the value the market eventually puts on the company's shares. This provides great upside potential for the chosen stock, but it also carries the risk of losing the bulk of an investment.
And with that out of the way, let's take a look at our candidates for this week:
This IT company with a memorable name aims to provide a Zen-like sense of calm to its clients, who utilize the company's slate of software offerings that automate a range of customer service functions. Zendesk provides those solutions through a subscription model, and at the moment it says there are over 42,000 customer accounts on its customer service platform. As is expected of a young tech company, Zendesk has posted consistent losses, although it reduced last year's shortfall to $23 million from 2012's $33 million. Revenue, meanwhile, has advanced nicely, coming in at $25 million in Q1 of this year against $14 million in the same period of 2012.
Zendesk (ticker symbol: ZEN) is scheduled to hit the New York Stock Exchange on Thursday. Slightly more than 11.1 million shares of the company will be sold for $8 to $10 apiece in an issue lead-underwritten by Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS), and Credit Suisse (NYSE:CS).
Jumei International Holding
China is an immense market, so it's no small thing to claim to be the No. 1 online domestic retailer of beauty products, as Jumei International Holding does. According to the company's figures, it held around 22% of that market last year. That was enough to bring in net revenues of $483 million, more than double the 2012 tally. The company was also profitable both 2013 (to the tune of $25 million) and in the preceding year ($8.1 million).
The Chinese company will make its American market debut on Friday, with the sale of 9.5 million American Depositary Shares on the NYSE. The lead underwriters of the flotation are Goldman Sachs (Asia), Credit Suisse, and JPMorgan Chase (NYSE:JPM) unit J.P. Morgan, and the issue price is to be $19.50 to $21.50 per ADS. The ticker symbol will be JMEI.
As its name implies, this operator of a popular online auto-buying platform aims to provide its customers with the fairest price for a car. It's been in business since 2009, growing its top line at a strong clip since then. It hasn't managed to turn this into bottom-line profitability, but the eternal and unbreakable love affair between Americans and automobiles gives it a big, lucrative market to benefit from, as does the company's partner network of more than 7,700 "TrueCar Certified Dealers" throughout the country.
Just under 7.8 million shares of TrueCar will make their way to the Nasdaq on Friday under the ticker symbol TRUE, priced at $12 to $14 per share. The lead underwriters are Goldman Sachs, J.P. Morgan, and Royal Bank of Canada's (NYSE:RY) RBC Capital Markets.