The IPOX® Week - May 8, 2023
Headlines:
- Strong earnings propel IPOX® 100 U.S. (ETF: FPX) to winning week.
- Small and Mid-cap IPOX® SMID climbs +0.80%, outperforms anew.
- IPOX® SPAC (SPAC) gains +0.33%. 2 U.S. SPACs launched last week.
- J&J’s Kenvue (KVUE US), largest U.S. IPO since 2021, surges and joins FPX.
WEEKLY IPOX® PERFORMANCE REVIEW: The IPOX® Indexes traded mixed last week as market participants reacted to various macroeconomic events and earnings reports, leading to a divergence in performance across the board. The Fed’s announcement of a 25 bps. rate hike, coupled with recession-defying job numbers, increased jitters in the bond market, driving long-term treasury yields (e.g., 30-year bonds) higher. In the U.S., equity markets struggled with negative sentiment, reacting with heightened volatility (VIX: +8.94%) as challenges in the banking sector persist after JP Morgan’s takeover of First Republic Bank. Despite this uncertain environment, the IPOX® 100 U.S. (ETF: FPX) outperformed the S&P 500 (ETF: SPY), gaining +1.01% compared to the benchmark’s -0.80% drop last week, as several of our large-cap holdings reported positive quarterly earnings. In addition, our small- and medium cap focused IPOX® SMID (IXSM: +0.80%) also showed relative strength, continuing its momentum to +5.70% since its March 17 launch. In Europe, the IPOX® Europe (ETF: FPXE) faced headwinds, losing -1.32% to +8.48% YTD as the Bank of England and the European Central Bank also announced further rate hikes. Internationally, the IPOX® International (ETF: FPXI) fell -1.22% to +1.52% YTD with Chinese equities continuing to lag, i.e. IPOX® China (CNI: -2.67%), as e-commerce giant Alibaba denied rumors of a planned U.S. IPO for $39b value global unit including AliExpress.
GINDEX® PERFORMANCE REVIEW: IPO M&A-focused stocks traded relatively flat last week. While the GINDEX® U.S. (GNDX: +0.01%) continued to trade in line with the Value Line Dividend Index (ETF: FVD), our GINDEX® International (GNDXI: -0.11%) fell slightly.
GINDEX® PERFORMANCE REVIEW: IPO M&A-focused stocks traded mixed last week. While the GINDEX® U.S. (GNDX) continued to trade in line with the Value Line Dividend Index (ETF: FVD), our GINDEX® International (GNDXI: +0.65%) outperformed its benchmark.
IPOX® PORTFOLIO STOCKS IN FOCUS: With earnings season in full swing, we noted widely distributed returns last week. The IPOX® 100 U.S. (ETF: FPX) was propelled upwards by its second-largest holding, ride-hailing app Uber (UBER US: +20.45%), which surged after reporting a rise in revenue. Our 5th largest holding, chipmaker On Semiconductor (ON US: +11.44%) beat EPS and sales estimates. In the health care sector, biotechs Apellis Pharma (APLS US: +9.48%), Arcellx (ACLX US: +4.92%) both reached new post-IPO highs after earnings, while GINDEX® U.S. (GNDX) and IPOX® Health Innovation (IPHI) holding, pharma giant Eli Lilly (LLY US: +8.07%) jumped to record highs on Alzheimer trial data. Personal finance firm Nerdwallet (NRDS US: -31.98%) lost a third of its value after lowering revenue guidance, citing slower growth, tighter credit conditions and ongoing challenges in the financial services sector. The IPOX® Europe (ETF: FPXE) was led by two firms that gained analyst upgrades, Swiss inflammation-focused biotech MoonLake Immunotherapeutics (MLTX US: +17.37%) and Israeli cross-border e-commerce facilitator Global-E Online (GLBE US: +9.36%). Last week’s top gainer, Norwegian game-based education platform Kahoot! (KAHOT NO: -16.88%) fell as the sector considers the potential impact of A.I. technology on business models. In the IPOX® International (ETF: FPXI), Japanese electronics supplier TDK (6762 JP: +5.17%) gained as their lithium battery customer Apple (AAPL US) reported record iPhone sales. Swedish music streaming service Spotify (SPOT US: +5.22%) climbed as analysts raised price targets. Brazil retailer Assai (ASAI3 BS: -12.96%) continued to drop on missed earnings estimates.
GLOBAL IPO DEAL FLOW REVIEW AND OUTLOOK: 3 large IPOs started trading last week, gaining an average of +14.95% based on the difference between the final offer price and Friday's close. Italian gambling operator Lottomatica (LTMC IM: -6.16%) started trading in Milan after raising over $660m, largest IPO in Europe in 2023. The sports betting and online casino operator will be added to the IPOX® Europe (ETF: FPXE) from May 10, replacing the soon to be de-listed communication towers firm Vantage Towers (VTWR GR). Our most recent IPOX® Week IPO Pre-Launch feature, Johnson & Johnson consumer health spin-off Kenvue (KVUE US: +21.27%), was the biggest offer last week, raising $3.8 billion in the largest U.S. IPO since Rivian in 2021. Kenvue joined the IPOX® 100 U.S. (ETF: FPX) on Friday, replacing social media platform Pinterest (PINS US). Inflammation drug maker Acelyrin (SLRN US: +30.56%) was another record-breaking debut last week, raising $540m, the biggest offer in the biotechnology sector since 2021. Both listings are seen as positive signs for the re-opening of the biotechnology/pharma IPO window. Two sizable listings are planned for this week, both in Hong Kong: Monday: Cancer-focused biotech Beijing Luzhu Biotechnology (2480 HK, $43m offer). Thursday: Marketing services provider Plus Group Holdings (2486 HK, $37m).
THE IPOX® SPAC (SPAC): The Index of a selected 50 constituents trading at both the pre- and post-consummation stage added +0.33% to +2.73% YTD. The index was led by biopharmaceutical company MoonLake Immunotherapeutics (MLTX US: +17.37%) with a new buy rating at a whopping $51 price target (almost 90% upside based on Friday’s close). While supply chain software provider E2open (ETWO US: -26.55%) plunged on disappointing earnings. Other SPAC news from last week: 1) 4 SPACs Announced Merger Agreement include Corner Growth Acquisition (COOL US: +0.20%) with London-traded IT solutions and services company Noventiq. 2) 1 SPAC Approved Business Combination include Jupiter Wellness Acquisition (JWAC US: -28.17%) with China-based EV manufacturer Chijet. 3) 9 SPACs announced and/or completed liquidation. 4) 2 new SPACs launched last week in the U.S.
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