AnalytixInsight

Nearly two-thirds of tech companies that went public via IPO this year are trading below their IPO price, according to data provided by Dealogic. The weak performance is a reflection of both the market, which has turned jittery over the past few months, and the massive increase in the number of companies going public. Of the 132 tech IPOs, 85 are trading below their IPO price as of the close of the market Monday. Looked at another way, the stock prices of newly public tech companies rose an average of 24% a month after their IPO this year, compared to 41% last year. And as time went on, this year’s offerings performed even worse. This lack lustre performance extends to small cap Canadian listed stocks as well, Sophic Capital looked at the performance of tech and tech adjacent, sub $100 million market stocks as of Nov 30th; we found that the median stock is this group is trading ~65% below its 52 week high, which makes this year’s tax loss selling even more pronounced than usual. The jury is still out on whether this will lead to  a better January effect. Against this backdrop, companies continue to execute, last week, EMERGE (ECOM-TSXV) achieved record Gross Merchandise Sales of $10 million in November 2021, exceeding entire reported GMS from Q3 2021. A few weeks ago, Sophic Client Clear Blue Technologies (CBLU-TSXV), provided a bullish outlook, as customer planning for telecom system rollouts and wireless lighting construction planning for 2022 is very active. In the USA, SEC Chair, Gary Gensler signaled tighter SPAC regulations could be coming soon. China is preparing a blacklist of which kinds of tech companies won’t be able to use VIEs to raise foreign capital and sell shares abroad, but it will likely grandfather in companies that have already used the legal structure to bypass rules banning foreign investment.

This past week witnessed several high profile Canadian VC financing announcements, even as US VCs and Hedge Funds propelled first 9-month Canadian VC to new record $10.7 billion. In their quest to develop commercial fusion power, General Fusion just reached another milestone with what it is describing as an oversubscribed $166 million Series E funding round. This is the second Series E funding round that the company has announced. Klue scored a$79 million from Tiger Global, Salesforce Ventures (October). We introduced Sophic client Swarmio Media (SWRM-CSE); Swarmio not only provides edge computing solutions for gaming but also the means for telco operators to build something demanded by the Gen-Z gamer: community. US and globally listed tech companies had a tumultuous week, as Ride-hailing giant Grab slumped 23% in its Nasdaq trading debut after blockbuster SPAC deal. India’s ride-hailing app Ola plans IPO in first half of 2022. Chinese ride-hailing giant Didi Global said it would delist from the New York Stock Exchange and start preparing for a listing in Hong Kong. Cathie Wood’s ARK Invest snapped up nearly US$49 million worth of Twitter shares on Tuesday, taking advantage of a slide in the stock after CEO Jack Dorsey said he would step down as CEO. Microsoft CEO Satya Nadella sold half of his stake in the company in a series of transactions last week, divesting about 840,000 shares for a total of more than US$285 million. Apple warned suppliers about diminishing iPhone 13 demand due to wait times during chip shortage.