Filed under: Company News, IPOs, Investing
Investors tend to love shiny new things, making the IPO market a hotbed of excitement. More than 100 companies have gone public on stateside exchanges this year, but some of them have fallen flat. Let’s take a look at a few of the market’s more disappointing new issues.
Care.com (CRCM) — Down 54 percent
One of this year’s earliest IPOs was Care.com. The online marketplace for care services went public at $17 in January, but it has gone on to shed more than half of its value.
On the surface, Care.com should be a winner. Leveraging the power of the Internet to pair up nannies, tutors, maids, and senior-care pros with the families that want to hire them sounds like a winning model.
Growth is certainly there: There are now 5.8 million caregivers listed on the site, 37 percent more than a year earlier. Unfortunately, we’re not seeing the profitability that the scalable Internet model seems to enhance when a company is moving in the right direction. Care.com will post another steep loss this year, and analysts don’t see an annual profit until 2017 at the earliest.
Vivint Solar (VSLR) — Down 44 percent
When home security giant Vivint decided to take its solar division public, it seemed like a slam dunk. Vivint had a thick Rolodex of homeowners as existing customers for other services, and the market was mesmerized by Elon Musk’s SolarCity (SCTY), paving the way for another residential installer of solar energy systems to hit the market.
Unfortunately, Vivint went public in October, when the market was already starting to sour on SolarCity since its shares peaked in February. Vivint Solar didn’t help its own chances by reporting a wider than expected loss in its first quarterly report as a public company in November.
Wayfair (W) — Down 30 percent
Wayfair should’ve been the next dot-com darling. It managed to disrupt furniture retailing, something that many naysayers thought would never work online. Wayfair’s multi-site approach and slick marketing helped drive sales from $517.3 million in 2011 to $601 million in 2012 and $915.8 million in 2013.
However, just as Care.com hasn’t been able to overcome its deficit-riddled financial statements, Wayfair can’t seem to turn the corner of profitability. Top-line growth is there, but earnings have been an armoire that’s hard to crack open.
King Digital (KING) — Down 29 percent
Investors should always be concerned when a company’s flagship offering is starting to fade in popularity as it goes public. That’s exactly what happened with King Digital, the mobile gaming giant that happened to time its IPO just as “Candy Crush Saga” was peaking in popularity.
King Digital has some promising games in its arsenal, but gross bookings for its biggest game started to fade late last year. It’s not just candy that was crushed at King Digital in 2014.
Sportsman’s Warehouse (SPWH) — Down 24 percent
The outdoor sporting goods retailer’s springtime IPO went off without a hitch at $9.50, but then the hunter became the hunted. Sportsman’s Warehouse has been able to expand its retail reach, but sales are slipping at the individual store level.
Sportsman’s Warehouse cites a drop in demand for firearms and ammunition for the problematic 9.5 percent plunge in comparable-store sales through the first three quarters of the year. The retailer remains quite profitable, but investors may be concerned that the chain went through Chapter 11 bankruptcy protection five years ago.
Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of SolarCity. Try any of our Foolish newsletter services free for 30 days. Is your portfolio ready for the new year? Check out our free report on one great stock to buy for 2015 and beyond.
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Source: Investing
