Where are they now?
Shares of online dental company and 2019 IPO SmileDirectClub fell more than 9% on Thursday after the company reported a big quarterly profit miss, and it’s not last year’s only market newcomer struggling to stem its losses.
Here’s how some newly public companies have performed since their 2019 debuts:
The group’s evident winner is likely to keep winning, Todd Gordon, managing director at Ascent Wealth Partners, told CNBC’s “Trading Nation” on Thursday.
“I personally like Beyond Meat,” he said, citing a chart. “We’re seeing massive reduction in pork and beef processing to the tune of 25 and 10%, respectively. The stock has responded.”
“We’ve broken the resistance at [$]100 if you look at that downtrend channel. Now, we’re facing the 2020 high of about 135,” he said.
Gordon also highlighted a correlation between the stock of Beyond Meat and that of meat and poultry processor Tyson Foods.
“If you look at Tyson Foods overlaid on top of Beyond Meat, there’s clearly an inverse relationship here,” he said.
“What’s interesting is Tyson’s got a market cap of about [$]21 billion where Beyond Meat’s only at about 8 billion, so, maybe a little room to catch up,” he said. “If Tyson continues to push below that 50 to 55 [level] and Beyond continues to move above that 135, that inverse relationship … probably should continue.”
Michael Bapis, managing director of Vios Advisors at Rockefeller Capital Management, agreed that Beyond Meat was poised to win out long term.
“I think the biggest question for all of these companies is how well can they adjust their business plan to the current environment?” Bapis said in the same “Trading Nation” interview.
“An IPO normally takes a year to 18 months to see how their story builds, to see how they get their earnings structured, and now, this gets pushed out even longer. But you can’t really look at the earnings right now. Our earnings have been reset across all sectors,” he said.
As for the short-term outlook for 2019 IPO stocks, Bapis said he was “cautious on all of them.”
“Longer term, though, Beyond Meat, that is a food services business and people are going to be eating at home more than ever,” he said. “Longer term, we’re going to get back in Ubers, we’re going to get back to Lyft, and this is a chance for these companies to trim the fat … and get to a place in their company [where] they can really excel once all of this turns around.”
Renaissance Capital’s U.S. IPO ETF (IPO), which tracks domestic public offerings, is up almost 7% year to date, trouncing the S&P 500’s nearly 12% loss over the same time frame. The fund’s top holdings are Uber, DocuSign, which went public in 2018, 2019 direct listing Spotify, late-2018 biotech IPO Moderna, and Slack.
Disclosure: Gordon owns shares and options of Beyond Meat. Vios Advisors owns shares of Beyond Meat and Lyft.