Market Consensus: So far Q3 results have been “good enough” to push estimates higher and propel the S&P to new highs. The IPO market is in full swing to get deals done while conditions remain favorable. At some point, higher rates may crimp valuations.
Last Week: We highlighted GitLab (GTLB) and it was the star of the show pricing way above its original range and rocketing up to $106 (now $128!). The valuation defies description. Vita Coco (COCO) is a deal I really like but so far has done poorly.
I need to be a little glib here because of the sheer volume right now:
- Dogs with fleas: Rent the Runway (RENT) has received a raft of negative analysis here is one very good one by Petition. Udemy (UDMY) is a crappy company with a vulnerable position in the online education space. We will still watch them. Sometimes if everyone is negative you do better taking the other side. Still better places exist to do work.
- Solo Brands (DTC) – Cool camp stoves. I like mine. Timing seems off. Should have sold to Yeti (YETI).
- GlobalFoundries (GFS) – Striking while the iron is hot and chip shortages are headline news. Not clear if they will ever make money.
- Boring deal that could be great – Fluence Energy (FLNC) is doing a $700M deal with a $3-4B cap. You might think of this one as “renewable energy solutions” for large energy enterprises. Less sizzle here but more steak. I hope it gets done at a discount and breaks price ;-).
- Informatica (INFA) has been around for ever and has a built a $1.4B business in the enteprise data management space. Feels pretty legacy. Question is what will people pay for it?
- HireRight (HRT) – Lots of jobs, no people.
- I think it’s too late for Arteris (AIP) in the semiconductor space. Feels like yesterday to me.
- Less invasive root canals? Not sure if it’s a good stock but if I ever need a root canal I sure want a less invasive one. Sonendo (SONX).
- But on the other hand this “minimally intensive” body contouring process scares the crap out of me. But hey, fat people want to be thin and look at how well Zeltiq did. AirSculpt Technologies (AIRS) is doing a small $160M deal.
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New Notes: We hope to get caught up this week and push a few of our current drafts out the door even if they are not perfect.
Pipeline: Filings keep rolling in. Old Wall Street name GLG (GLGX) filed for an IPO. Plenty more SaaS names focusing on the SMB market are coming too. There are a ton of new SPAC offerings too. For the first time in a very long time, the number of listed public companies is going up. Research coverage remains thin, especially in small-cap names and SPAC IPO listings.
New Street Coverage: The new coverage flood continues with OLPX, AMPL, and WRBY out today. (We own AMPL.) Tomorrow we should see EXAI, FWRG, and TDCX.
Lockups Off: Lots of lockup expirations. I’ll be watching Endeavor (EDR), Dutch Brothers (BROS), and Robinhood (HOOD) to take the temperature of insiders here.
Parting Thoughts: Thanks to tons of new names, lower prices (on some), and little to no good research coverage we have never been busier. It feels like a good time to take some profits and keep looking for new names.