By Benyamin Davidsons
Blackstone Group will have some explaining to do to investors, due to losses it made on a few of its Initial Public Offerings.
As reported by the NY Post, while it’s been a record-breaking year for IPOs, the IPO aftermarket has been a disappointment across the board for 2021. Billionaire Stephen Schwarzman’s Blackstone is among investors who picked a few duds in the IPO market. The private-equity giant holds a hefty ownership stake in 10 companies that went public on the New York Stock Exchange or Nasdaq in 2021, including one sold to a SPAC, or special-purpose acquisition company. Half of those companies are now trading well below their offering prices.
Four of the firms, which Blackstone picked up, have tumbled more than 30 percent in the last 90 days. Among them is Oatly oat drink brand, whose stock is down to $8.14 from $16.30, marking a 50 percent decline. Another is Bumble dating app, founded by Whitney Wolfe, which fell 35 percent in that time period, tumbling to $34.87 from $53.50. The IPO performance presents a sharp contrast to the S&P 500, which rose 24 percent for the year, and the Nasdaq, which is up 19 percent.
In 2021, roughly 1,000 companies went public- an unprecedented number of deals which managed to raise a record $300 billion. In their aftermath, however, their stock s are down 20 percent this year compared to the S&P 500, says University of Florida Professor Jay Ritter, who is known as “Mr. IPO”. “Investors were buying IPOs on a lot of optimistic assumptions,” Ritter added.
As per The Post, Oatly, which went public in May, missed earnings forecasts in its most recent quarter. Last month, the company announced it had to conduct a limited recall related to “loose metal items” found in its milk-processing equipment. In the meantime, Bumble posted a decline in overall user growth in its third quarter. Paying customers dropped to 2.87 million down from 2.93 million in the previous quarter. Analysts fear that the dating app was fueled by the pandemic, and the growth is not sustainable. On Thursday, the dating app stock closed at $34.87, down from an all-time high of $84.80 per share after the IPO in February.
A Blackstone rep told The Post its 2021 IPOs have delivered “exceptional absolute and relative performance” saying they are up 32 percent on average from when they went public. That data includes Sona Comstar, an auto technology company which listed its shares on the National Stock Exchange of India.
