25 IPOs that bombed on their first day
Many analysts would argue that Uber's recent initial public offering was a failure. Uber's IPO—through a chain of stock price drops, starting with a 7.66% drop on the IPO's first day—saw a loss in value of $618 million, representing the greatest dollar loss for an American IPO since IPOs were first monitored in 1975, according to IPO scholar Jay Ritter of the University of Florida's Warrington College of Business Administration.
An IPO, as a capital-raising tool, can reveal problems with a company's reputation, leadership, competition strategy, or product confidence. Uber has suffered from C-suite instability for some time now, which betrayed the company's $100 billion validation. Issues with its driver contractors and lingering pushback from regulators and the taxi industry did not help.
With more than 60% of all IPOs launched between 1975 and 2011 having a negative absolute return after five years on the market, most initial public offerings are poised to fail sooner or later. The process of inviting investors to take a deeper look at a company typically reveals critical flaws that may be tough for a company to resolve and difficult to recognize immediately.
To help understand how IPOs can go bad, Stacker looked at IPO data from June 2014 to June 2019 to determine which IPOs had the worst first-day returns in the last five years. To achieve this, Stacker gathered data from IPOScoop.com and the Warrington College of Business, filtering for IPOs that dropped at least 5% in price on their first day of trading. As IPO data tends to be proprietary, this list is inclusive, but not exhaustive.
For this analysis, Stacker looks at the IPO's offering price, and not its opening price. An offering price is a price the company is seeking for its stock, per the IPO's prospectus. The opening price is the price the stock first sells for when it is introduced to the market.
It should be noted that first-day returns are not necessarily indicative of an IPO's success or the future profitability of a business. Facebook, for example, had a terrible 2012 IPO. Offering at $38, the company ended 2012 with a stock price of $17. Today, Facebook (NASDAQ: FB) sells at more than $170 per share. Keep reading to see which companies had a worse IPO first day than Uber.
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#25: Kaleido Biosciences
- IPO offering price: $15
- Closing price at end of first day: $14.23
- Share price drop on IPO's first day: 94.87%
Kaleido Biosciences is a pharmaceutical firm that seeks to study the human microbiome to find solutions to treat diseases and significantly improve the quality of health. Despite seeing an offering price downgrade from the $20 to $22 range, the company was still unable to make the expected price point. The IPO was to advance a drug candidate, KB195, from Phase 1 testing to Phase 2. At the end of trading June 10, Kaleido Biosciences (NASDAQ: KLDO) was selling at $14.25.
#24: Vaccinex
- IPO offering price: $12
- Closing price at end of first day: $11.38
- Share price drop on IPO's first day: 94.83%
Vaccinex is a pharmaceutical firm that seeks to create treatments for current serious diseases that have no effective medical solution. Ongoing trials include an antibody that will block the signaling of immune or inflammatory cells to an injury or cancerous tumor and a platform that would encourage the discovery of antibodies in the presence of an infection or virus. At the end of trading June 10, Vaccinex (NASDAQ: VCNX) was selling at $5.86.
#23: Alector
- IPO offering price: $19
- Closing price at end of first day: $18
- Share price drop on IPO's first day: 94.74%
Alector is a pharmaceutical firm exploring solutions to neurodegeneration. The company's methodology is to study how immune deficiencies and immune dysfunction may drive degenerative brain disorders. At the end of trading June 10, Alector (NASDAQ: ALEC) was trading at its offering price of $19.
#22: Berry Petroleum
- IPO offering price: $14
- Closing price at end of first day: $13.25
- Share price drop on IPO's first day: 94.64%
Berry Petroleum is a petroleum and natural gas extraction company based in California. The IPO was meant to buy back some of its common stock from mutual funds controlled by Benefit Street Partners and Oaktree Capital Management. Berry Petroleum was the first exploration and production company to offer an IPO since 2016. At the end of trading June 10, Berry Petroleum (NASDAQ: BRY) was selling at $10.44.
#21: YETI Holdings
- IPO offering price: $18.00
- Closing price at end of first day: $17
- Share price drop on IPO's first day: 94.44%
YETI Holdings is the holding company for the YETI brand of hard and soft coolers, outdoor living products, and drinkware. YETI initially filed for an IPO in 2016, only to withdraw its application in 2018, citing "market conditions." At the end of trading June 10, YETI Holdings (NYSE: YETI) was selling at $25.31.
#20: Forty Seven
- IPO offering price: $16
- Closing price at end of first day: $15.05
- Share price drop on IPO's first day: 94.06%
Forty Seven is a pharmaceutical company committed to creating checkpoint therapies to develop macrophages for the fighting of cancer. Macrophages serve to swallow and ingest abnormal and invading cells, permitting the mobilization of T cells, antibodies, and other components of the immune system. The company's signature effectively blocks cancer cells' ability to cloak themselves, leaving tumors exposed to destruction by the macrophages. At the end of trading June 10, Forty Seven (NASDAQ: FTSV) was selling at $10.99.
Tie-#19: Applied Therapeutics
- IPO offering price: $10
- Closing price at end of first day: $9.40
- Share price drop on IPO's first day: 94%
Applied Therapeutics is a biopharmaceutical company that seeks to create “transformative, life-changing treatments for the patients who desperately need them.” The company's methodology is to target the molecules and pathways that have been shown to lead to debilitating diseases. At the end of trading June 10, Applied Therapeutics (NASDAQ: APLT) was selling at $9.90.
Tie-#19: Medalist Diversified REIT
- IPO offering price: $10
- Closing price at end of first day: $9.40
- Share price drop on IPO's first day: 94%
Medalist Diversified REIT is a commercial real estate portfolio holder, managing properties in Virginia, North Carolina, South Carolina, Georgia, Alabama, and Florida. The company invests in anchored-retail, industrial, multi-family, and limited service hotel properties. At the end of trading June 10, Medalist Diversified REIT (NASDAQ: MDRR) was selling at $4.64.
#17: Neon Therapeutics
- IPO offering price: $16
- Closing price at end of first day: $15
- Share price drop on IPO's first day: 93.75%
Neon Therapeutics is a biopharmaceutical company that uses neoantigen-targeted therapies to combat cancer. Neoantigens are toxins or foreign substances created by the genetic mutations from the presence of cancer. As normal cells do not have neoantigens, these substances can be used as a target by drug platforms to attack cancerous tumors. At the end of trading June 10, Neon Therapeutics (NASDAQ: NTGN) was selling at $5.22.
#16: New Fortress Energy
- IPO offering price: $14
- Closing price at end of first day: $13.07
- Share price drop on IPO's first day: 93.36%
New Fortress Energy is a clean energy generation company. It funds, builds, and manages natural gas infrastructure as turnkey solutions for industries and local communities. At the end of trading June 10, New Fortress Energy (NASDAQ: NFE) was selling at $10.
#15: Uber Technologies
- IPO offering price: $45
- Closing price at end of first day: $41.57
- Share price drop on IPO's first day: 92.38%
It is hard to point out precisely what went wrong with Uber's IPO. The IPO—while technically underselling—was still one of the most successful IPOs in history for total capital raised, a seemingly excessive company valuation of $100 billion and instability in the company's leadership structure ultimately undermined it. A $1 billion quarterly loss seems to back investors' insecurity about the company's worth. At the end of trading June 10, Uber Technologies (NYSE: UBER) was selling at $42.61.
#14: Guardion Health Sciences
- IPO offering price: $4
- Closing price at end of first day: $3.68
- Share price drop on IPO's first day: 92%
Guardion Health Sciences is a pharmaceutical and medical device manufacturing company. A key innovation of the company is vision-specific medical food or food to be consumed daily for the combating of ocular diseases. At the end of trading June 10, Guardion Health Services (NASDAQ: GHSI) was selling at $1.70.
#13: Bain Capital Specialty Finance
- IPO offering price: $20.25
- Closing price at end of first day: $18
- Share price drop on IPO's first day: 88.89%
Bain Capital Specialty Finance is a Bain Capital Credit-managed firm that offers specialty finance products to middle market companies. Beyond the management scheme, ownership of the company is separate from the Mitt Romney-founded investment firm, which remains a private, employee-owned company. At the end of trading June 10, Bain Capital Specialty Finance (NYSE: BCSF) was selling at $18.55.
#12: Avedro
- IPO offering price: $14
- Closing price at end of first day: $12.29
- Share price drop on IPO's first day: 87.79%
Avedro is a pharmaceutical company that offers solutions for corneal reshaping. The company's Corneal Remodeling Platform uses corneal cross-linking for minimally intrusive treatments of ectatic corneal disorders. At the end of trading June 10, Avedro (NASDAQ: AVDR) was selling at $18.33.
#11: Bicycle Therapeutics
- IPO offering price: $14
- Closing price at end of first day: $12
- Share price drop on IPO's first day: 85.71%
Bicycle Therapeutics is a pharmaceutical company that is developing a class of medicine known as "bicycles." "Bicycles," or bicyclic peptides, allow for the targeting of cancerous targets that were intractable to traditional non-biological methodologies. At the end of trading June 10, Bicycle Therapeutics Limited (NASDAQ: BCYC) was trading at $11.90.
#10: Urovant Sciences
- IPO offering price: $14
- Closing price at end of first day: $11.65
- Share price drop on IPO's first day: 83.21%
Urovant Sciences is a pharmaceutical firm that is developing an oral medication for the treatment of overactive bladders and irritable bowel syndrome. At the end of trading June 10, Urovant Sciences (NASDAQ: UROV) was selling at $8.51.
#9: Moderna
- IPO offering price: $23.00
- Closing price at end of first day: $18.60
- Share price drop on IPO's first day: 80.87%
Moderna is a biopharmaceutical firm. The company is developing a class of drugs made from messenger RNA (mRNA), which can effectively alter the way cells behave and make proteins. At the end of trading June 10, Moderna (NASDAQ: MRNA) was selling at $15.67.
#8: Trevi Therapeutics
- IPO offering price: $10.00
- Closing price at end of first day: $7.89
- Share price drop on IPO's first day: 78.90%
Trevi Therapeutics is a pharmaceutical company that is developing nalbuphine ER—an oral, extended-release administration of the drug nalbuphine. Nalbuphine is used for the treatment and relief of severe pain. At the end of trading June 10, Trevi Therapeutics (NASDAQ: TRVI) was selling at $7.80.
#7: CooTek (Cayman) Inc.
- IPO offering price: $12
- Closing price at end of first day: $9.44
- Share price drop on IPO's first day: 78.67%
CooTek is a Chinese mobile app developer. The company produces apps for both iPhone and Android users in the fitness, lifestyle, healthcare, news, and entertainment verticals. The company has stated it wanted to use the proceeds of the IPO to invest in artificial intelligence and big data implementations for its apps, according to Capital Watch. At the end of trading June 10, CooTek (Cayman) Inc. (NYSE: CTK) was selling at $8.41.
#6: Super League Gaming
- IPO offering price: $11
- Closing price at end of first day: $8.50
- Share price drop on IPO's first day: 77.27%
Super League Gaming is an esports platform that allows amateur gamers the ability to play in esports-styled tournaments and events. The company runs 16 city leagues, which organize local and national gaming tournaments. At the end of trading, Super League Gaming (NASDAQ: SLGG) was selling at $7.30.
#5: Constellation Pharmaceuticals
- IPO offering price: $15
- Closing price at end of first day: $11.50
- Share price drop on IPO's first day: 76.67%
Constellation Pharmaceuticals is a biopharmaceutical company seeking to find solutions to diseases caused by gene mutation, such as cancer. The company's proprietary platform seeks to “generate small molecules against these targets that selectively modulate gene expression in tumor and immune cells to drive anti-tumor activity.” At the end of trading June 10, Constellation Pharmaceuticals (NASDAQ: CNST) was selling at $9.82.
#4: Entasis Therapeutics Holdings
- IPO offering price: $15
- Closing price at end of first day: $10.66
- Share price drop on IPO's first day: 71.07%
Entasis Therapeutics Holdings is a pharmaceutical company seeking to address the problem of multidrug-resistant bacteria. The company is developing a class of drugs that would fight multidrug-resistant infections. At the end of trading June 10, Entasis Therapeutics Holdings (NASDAQ: ETTX) was selling at $6.50.
#3: Axcella Health
- IPO offering price: $20.00
- Closing price at end of first day: $13.80
- Share price drop on IPO's first day: 69.00%
Massachusetts-based Axcella Health seeks to use Endogenous metabolic modulators to address metabolism problems. At the end of trading June 10, Axcella Health (NASDAQ: AXLA) was selling at $13.18.
#2: Ruhnn Holding Ltd.
- IPO offering price: $12.50
- Closing price at end of first day: $7.85
- Share price drop on IPO's first day: 62.80%
The Chinese firm Ruhnn Holding Ltd. styles itself as the largest internet key opinion leader, or influencer, in the e-commerce sphere in China. The company seeks to facilitate the pairing of key opinion leaders and brands to simplify the product ambassador finding process. At the end of trading June 10, Ruhnn Holding Ltd. (NASDAQ: RUHN) was selling at $3.24.
#1: Translate Bio
- IPO offering price: $13
- Closing price at end of first day: $0.00
- Share price drop on IPO's first day: 0.00%
It is unclear what exactly happened with Translate Bio's IPO. It appears that Translate Bio did not publicly offer its stock the day the IPO was supposed to open and opened officially at $11.50 when the company did open trading a day later. Sanofi's $45 million bid to partner with Translate Bio—which is a pharmaceutical company using messenger RNA to treat diseases caused by protein and gene dysfunction—saved the IPO for par. The IPO, however, which was meant to raise money for a clinical trial of a cystic fibrosis treatment, clearly underperformed its $115 million target. At the end of trading June 10, Translate Bio (NASDAQ: TBIO) was selling at $10.09.
