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The IPO Buzz: After Friday the 13th

A billion dollars’ worth of “blank check” IPOs are on tap this week after the Fed’s surprise rate cut on Sunday and U.S. stocks’ big rally on Friday, March 13th. Yes, Friday the 13th marked a “good luck” day for Wall Street: The three major U.S. stock market indexes reached for the sky and the blue-chip Dow scored its sharpest single-day point gain in history. The hope was that if those gains could hold, stocks would break out of a bear market.


The tape told a different story, though, following the Federal Reserve’s emergency action around 5 p.m. EDT on Sunday. The Fed slashed its key interest rate to near zero in an effort to curb the damage to the U.S. economy from the coronavirus pandemic. (This move was right out of the Fed’s playbook in 2008 when it cut the fed funds rate to near zero during the financial crisis.)


U.S. stock futures slid on Sunday. The Nikkei and the Hang Seng Index dropped.


Wall Street hates uncertainty.


Now to recap Friday the 13th: The Dow Jones Industrial Average closed at 23,185.62, up 1,985 points or 9.36 percent from 21,200.62 the day before. That close pushed the Dow further into a bear market; on Thursday, March 12th, the Dow was down 28.3 percent from its Feb. 12th all-time closing high. (Wall Street defines a bear market as a drop of 20 percent or more from a recent high.)


On Friday the 13th, the other two major U.S. stock market indexes reacted much like the Dow: The S&P 500 Index gained 9.29 percent and the NASDAQ Composite Index climbed 9.35 percent. It was Wall Street’s biggest rally since 2008.


That leaves one question: “Where’s the IPO market?”


Bears, Blank Checks and Unicorns


Judging from past bear market recoveries, it takes about four to six weeks before an IPO Calendar starts to come together. Nevertheless, something new has been added to the 2020 IPO Calendar.


SPACs, also known as “blank check” companies, are making a move in going public. In addition to the SPACs, the unicorns are sitting on the sidelines. CBInisghts, a unicorn tracker, lists 452 companies with a total cumulative valuation of $1,336 billion, which rounds, of course, to about $1.34 trillion. (A unicorn is a private company with a valuation of $1 billion or more.)


Over $1 Billion in Blank Checks


This brings us to this week’s IPO Calendar, which features three blank checks or SPACs (special-purpose acquisition companies) looking to raise over $1 billion. One intends to invest in the cannabis industry. The other two are looking to invest in the technology industry. These deals are all unit offerings.


Let’s take a look at these blank checks, organized by pricing and trading dates.


Monday evening pricing to trade Tuesday


Social Capital Hedosophia Holdings Corp. II (IPOB.U proposed), based in Palo Alto, California, is a newly formed SPAC that intends to focus its search for a target business operating in the technology industries primarily located in the United States.


The company intends to offer 30 million units at $10 each.


Social Capital Hedosophia Holdings Corp. III (IPOC.U proposed), based in Palo Alto, California, is a newly formed SPAC that intends to focus its search for a target business operating in the technology industries primarily located in the United States.


The company intends of offer 60 million units at $10 each.


Wednesday evening pricing to trade Thursday


Collective Growth (CGROU proposed), based in Austin, Texas, is a newly formed SPAC that intends to focus its search for target businesses on companies operating in the federally permissible cannabinoid industry, which are compliant with all applicable laws and regulations within the jurisdictions in which they are located or operate.


The company intends to offer 15 million units at $10 each.


Fourth Week of March


This brings us to the week of March 23 – the fourth and final full week of March – and the IPO Calendar is blank so far. But some names could pop onto the IPO Calendar when the U.S. Securities and Exchange Commission’s filing window opens again for business on Monday morning, March 16th.


Author / Source: John E. Fitzgibbon Jr. / IPOScoop.com