US investors were suffering from a bit of a nosebleed this week, in the form of Paytm (NYSE:PAYTM), the much anticipated tech IPO that has really flopped and left a lot of traders spitting feathers. It just goes to show that not all big tech IPOs will deliver.
Paytm was well funded and had a great collection of investors backing the IPO, including fund manager BlackRock and Canada’s CPP pension plan. It was India’s largest IPO at $2.5bn but it turned into one of the worst debuts for a tech company of this scale that anybody can recall.
As ever with these listings, if you got in before the IPO in the hopes of some upside action, you will be sorely disappointed now. However some buyers seem to be taking the lower price as an opportunity to pick up some Paytm stock. We have seen the stock price starting to claw its way back slowly, but we are about to hit the US Thanksgiving holiday shortly, which has the potential to kill some of this impetus.
Paytm has also cast somewhat of a pall over the pipeline for other tech listings and is obviously making some CEOs think again. It now looks like Paytm competitor MobiKwik may be having second thoughts about its own projected IPO. All eyes now on what Paytm stock does next.
Home Depot (NYSE:HD)
Shares in Home Depot have done well over the last few days, up from $371 to $405 at time of writing. Home Depot beat Wall Street estimates for Q3 earnings and revenue, hence the mark up by many big investors. The company also reported higher average ticket sizes for customers and noted that same store sales were up 6.1%.
There looks to be plenty of enthusiasm in the US for home improvements, and Home Depot said it anticipated the spending spree would continue into Q4 as customers continued to spruce up their homes into the holiday season, which in the US includes both Thanksgiving and Christmas. We can look for some more solid numbers from the company for Q4 and expect analysts to be even now revising their forecasts upwards.Other factors behind the rise in profits include the overall growth in value in US house prices and the increased activity of builders as well. A lot of professional handymen are now being allowed back into homes to carry out repairs and projects which had been put on hold since the start of the pandemic. That represents a backlog which plays into Home Depot’s hands, as it enjoys a big market share in this segment versus its competitors.
Home Depot said Halloween was also a factor – a non-event last year, this year it has also contributed to sales numbers. The firm’s trademark 12 foot tall Halloween skeleton was back on sale and disappearing fast in October. Shares in Home Depot are trading at close to an ATH right now, with the PE at about 27x.
Longeveron (NASDAQ:LGVN)
And now for the US biotech punt of the month, namely Longeveron. The company saw its stock leap from just over three bucks to hit close to $28 on the back of manic buying this week.
Longeveron is – you guessed it – a niche biotech company which is concentrating on research into chronic diseases associated with ageing and other cell-based therapies. It is tackling what is becoming a perennial problem in developed, wealthy societies where the average age of the population is over 45. That includes the US and big tranches of the EU too.Big areas of research for the company include Alzheimer’s disease, general physical frailty and Metabolic Syndrome (which increases the risk of ailments like strokes and heart disease). But it has also been making progress with treatment for rare conditions in infants.
As ever with niche biotech, it is the Food & Drug Administration in the US which is the great god that makes or breaks companies like this. The FDA just granted Rare Pediatric Disease designation to Longeveron’s Lomecel-B cell therapy for a rare congenital heart defect in infants. This allows the company to move forward with Phase 2 trials. The results of the Phase 1 trials have, admittedly, been excellent, with all the infants enrolled in the trial surviving and not requiring a transplant.
Before you get too excited, this is a small company with revenues of less than $3m. It has a market cap now of over $500m, boosted by the crazy buying as investors piled in. But it will be subject to some severe price swings.
