Q3 The Busiest Since 2014 For IPOs, Led By Unicorns, SPACs

The third quarter saw 86 companies go public via a traditional IPO. In the third quarter, 165 special purpose acquisition companies also raised funds.

Breaking Down IPO Trends: Health care and technology were the two largest sectors in the third quarter for funds raised.

Offerings were up 87% in the third quarter compared to the second quarter. The 86 IPOs were more than double the 38 that raised funds in last year's third quarter.

Overall, the third quarter saw a positive-to-negative ratio of 2.5-to-1 for positive vs. negative opens. This was down from the 5-to-1 ratio seen in the second quarter.

This marked the largest quarter for money raised since the third quarter of 2014, when Alibaba Group (NYSE: BABA) raised $25 billion in the largest IPO ever.

Top Q3 IPO Performers: The top five performing IPOs on the basis of opening day performance were:

• Nkarta Inc (NASDAQ: NKTX), a biotech company, saw shares surge 204%.
• BigCommerce Holdings Inc (NASDAQ: BIGC), a software-as-a-service company, saw shares climb 183%.
• CureVac (NASDAQ: CVAC), a biotech company, saw shares rise 175%.
• Berkeley Lights (NASDAQ: BLI), a cell biology company, saw shares jump 134%.
• nCino Inc. (NASDAQ: NCNO), a software-as-a-service company, saw shares rise 129%.

Related Link: The 2020 IPO Outlook: 13 Offerings On The Docket

Top Q3 IPO Laggards: The worst five performing IPOs on the basis of opening day performance were:

• GeoVax Labs (NASDAQ: GOVX), a biotech company, saw shares drop 25%.
• Sun BioPharma Inc (NASDAQ: SNBP), a biotech company, saw shares fall 20%.
• VIA Optronics (NYSE: VIAO), an interactive display company, saw shares lose 20%.
• Rackspace Technology (NASDAQ: RXT), a cloud services company, saw shares drop 20%.
• Siyata Mobile (NASDAQ: SYTA), a communications company, saw shares drop 17%.
• The Largest Q3 Raises: In the third quarter, 11 companies and SPACs raised $1 billion or more through traditional IPOs.
• Pershing Square Tontine Holdings (NYSE: PSTH), a Bill Ackman-backed SPAC, raised $4 billion. The SPAC opened 5.5% above its pricing.
• Snowflake Inc (NYSE: SNOW), a cloud-based data company, raised $3.4 billion. Shares opened 104% higher than the offering price.
• KE Holdings (NYSE: BEKE), a Chinese real estate company, raised $2.1 billion. Shares opened 75% higher than the offering price.
• Rocket Companies (NYSE: RKT), an online mortgage company, raised $1.8 billion. Shares opened at their IPO price of $18.
• Churchill Capital Corp IV (NYSE: CCIV), the fourth SPAC from Michael Klein, raised $1.8 billion. Shares opened slightly above their offering price.

Unicorns Lead the Way: The third quarter saw 10 unicorns with valuations of more than $1 billion hit the public market via IPOs. Snowflake, CureVac, Sumo Logic Inc (NASDAQ: SUMO), JFrog (NASDAQ: FROG), Good Rx Holdings (NASDAQ: GDRX), KE Holdings, Chindata Group (NYSE: CD) and Xpeng Inc (NYSE: XPEV) all went public in the third quarter.

All 10 unicorns saw their share prices increase on opening day, with an average opening day gain of 60%.

What’s Next For IPOs: The SPAC trend continues to heat up and could help the fourth quarter in terms of the number of offerings and the money raised. 

A number of unicorns like Airbnb could go public before the end of the year.

The Renaissance IPO ETF (NYSE: IPO) has seen shares increase 80% in 2020.