Class of 2020 – Financials Sector Performance Update

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Continuing the series that has looked at the performance of IPOs that have priced in 2020, this time I’m looking at the financials sector. This follows on from previous posts on Consumer Goods, Consumer Services and the Technology sector.

In total there has been 9 financial sector IPOs during 2020: Fathom Holdings (NASDAQ: FTHM), Go Health (NASDAQ: GOCO), Huize Holding Ltd (NASDAQ: HUIZ), Lemonade (NYSE: LMND), NexPoint Real Estate Finance (NYSE: NREF), Netstreit (NYSE: NTST), Rocket Companies (NYSE: RKT) , SelectQuote (NYSE: SLQT) and Trean Insurance Company (NASDAQ: TIG).

The best performer of the sector has been Lemonade, a new breed of insurance company that promises to challenge the status quo. The company’s offer price was $29 per share, which exploded upwards to close at $69.41 per share on its first day, a ~140% increase. It reached a high of $96 per share, although it has since retreated. 

The worst performer of the group has been Chicago-based Go Health (write up here). The company offers a health insurance marketplace in the United States and aims to solve a choice and selection problem for consumers when it comes to healthcare enrolment . It posted impressive figures (TALM ~ $28 billion, LTV/CAC ratio of 3.9x, Revenue Growth ~139 %) at its IPO, so probably deserves a closer look in an upcoming post. The IPO priced at $21 per share, closed at $19.13 on its first day and today is down ~26% from its offer price.

It’s always interesting to looking at the performance of IPOs from the first day close. In other words, looking at the returns available to public markets. In this case, we get an entirely different result:

Lemonade has performed quite poorly since its first day close, perhaps reflecting over-enthusiasm in its first few trading days. On the other hand, Fathom Holdings, the cloud based real estate brokerage company has increased very significantly from its first day close and is up ~89%.

Its still early days for Rocket Companies, that has whip-sawed above and below its offer price. In my write up, I discussed the reasons why I would avoid the company (here and here).

I will check back in on this sector next quarter.

Source: https://ipohawk.com/class-of-2020-financials-sector-performance-update/?utm_source=rss&utm_medium=rss&utm_campaign=class-of-2020-financials-sector-performance-update