In this article we present the list of 10 Struggling IPOs To Buy For The Long-Term.
Given the difficult market conditions over the past year, it’s not surprising that several of the most prominent IPOs over the past 12 months, including Third Harmonic Bio, Inc. (NASDAQ:THRD), Corebridge Financial, Inc. (NYSE:CRBG), and Mineralys Therapeutics, Inc. (NASDAQ:MLYS), have all struggled to stay afloat of their IPO offering price.
In fact, the broader market conditions have led to an overall dirth in new IPOs, with fewer companies going public in 2023 than even a year ago. According to the EY Global IPO Trends Q1 2023 report, just 299 companies launched IPOs in the first quarter, down 8% year-over-year.
That list of 299 companies didn’t come close to containing any of the 15 Most Valuable Pre-IPO Companies in The World, as they tended to be of the smaller variety, raising just $21.5 billion (down 61% year-over-year) or $71.9 million on average. In the U.S., there were just 63 IPOs in Q1, down 41% from a year earlier, and well off the record IPO pace of 2021, when over 1,000 companies went public in the U.S. alone.
A variety of factors were cited as playing major reasons why the IPO market has ground to a relative halt, including the weak global macroeconomic environment, the unexpected turbulence in the banking industry, and rising inflation and interest rates.
There certainly weren’t many big names to consider for our list of the 10 Struggling IPOs To Buy For The Long-Term, given that we limited our list to companies which went public within the last 12 months. Our ranking of the 12 Best IPO Stocks To Buy Heading Into 2023 on the other hand, which went further back to find intriguing new companies to consider for your portfolio, contained several major IPOs, including Roblox Corporation (NYSE:RBLX), DoorDash, Inc. (NYSE:DASH), and Peloton Interactive, Inc. (NASDAQ:PTON).
The pickings of the best IPO stocks of the past year were particularly slim when looking at companies trading on U.S. exchanges, with a huge chunk of the new IPOs being SPACs, which we avoided. While those companies could end up being valuable, depending on what assets they end up acquiring, they don’t make for particularly interesting investments or discussions at this point in time, when they’re essentially just blank slates.
While the IPO market has been a letdown so far this year, there are several upcoming companies to invest in that will generate far more interest later this year, including payment processor Stripe, social media company Reddit, and online grocery delivery service Instacart, all of which are expected to be valued at greater than $10 billion. Stripe in fact is expected to top a $50 billion valuation from day one, which could end up ranking it among the 15 Largest IPOs of All Time Worldwide. That would also be more than double the amount raised by all 299 global IPOs combined in Q1.
With that in mind, let’s check out 10 struggling IPOs to buy for the long-term.
Our Methodology
The following struggling IPOs have all seen their share prices decline since they went public and are ranked based on hedge fund sentiment. We follow a select group of hedge funds because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns.
All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q1 2023 reporting period.
10 Struggling IPOs To Buy For The Long-Term
10. Laser Photonics Corporation (NASDAQ:LASE)
Number of Hedge Fund Shareholders: 1
IPO Price: $5.00
Current Price (as of June 9): $3.88
Mineralys Therapeutics, Inc. (NASDAQ:MLYS), Third Harmonic Bio, Inc. (NASDAQ:THRD), and Corebridge Financial, Inc. (NYSE:CRBG) have attracted the most hedge fund attention among the group of recent IPOs that have struggled out of the gates over the last year.
Attracting far less interest is Laser Photonics Corporation (NASDAQ:LASE), with just one fund having added the company to its 13F portfolio thus far, that being John Overdeck and David Siegel’s Two Sigma Advisors, which owns 11,742 shares.
Laser Photonics Corporation (NASDAQ:LASE), which sells laser cleaning systems, recently launched an investment plan, which included hiring three new sales executives with experience in the defense, automotive, and energy spaces to help spearhead the company’s push into those key verticals. The company has received orders from the likes of Thomas Instrument, Caterpillar, and GE Gas Power.
Laser Photonics Corporation (NASDAQ:LASE) managed $1.2 million in revenue in Q4, which was flat year-over-year, while its EPS swung from a gain of $0.01 to a loss of $0.36. The company’s goal is to double revenue over the next several years.
9. Nxu, Inc. (NASDAQ:NXU)
Number of Hedge Fund Shareholders: 2
IPO Price: $27.50
Current Price (as of June 9): $0.58
To say Nxu, Inc. (NASDAQ:NXU) has been struggling would be the understatement of the century. The maker of battery cells and packs, as well as energy storage solutions has pretty much been a nightmare for investors since hitting the market on September 27 of last year, losing 98% of its value.
Two Sigma Advisors and Israel Englander’s Millennium Management were the lone hedge fund shareholders of Nxu, Inc. (NASDAQ:NXU) as of March 31, with two other funds having sold out of their stakes during the quarter.
While Nxu, Inc. (NASDAQ:NXU)’s results since going public have failed to impress investors, there is certainly potential for the company to grow at a considerable rate in the years to come given the current state of EV infrastructure. The total addressable market for its vertically integrated ecosystem of products is expected to reach $800 billion by 2030.
T7. GigaCloud Technology Inc. (NASDAQ:GCT)
Number of Hedge Fund Shareholders: 3
IPO Price: $12.25
Current Price (as of June 9): $7.00
GigaCloud Technology Inc. (NASDAQ:GCT), a Hong Kong-based provider of end-to-end B2B ecommerce solutions, has attracted small investments from a handful of prominent hedge funds, including Jim Simons’ Renaissance Technologies and Paul Marshall and Ian Wace’s Marshall Wace LLP.
GigaCloud Technology Inc. (NASDAQ:GCT) shares are well off their IPO price despite the company delivering strong first quarter results that included a massive bottom line beat. The company’s GAAP EPS of $0.39 was three-times greater than expectations, while its revenue of $128 million also topped estimates as well as the upper range of the company’s own guidance.
Aegis analyst Rommel Dionisio initiated coverage on GigaCloud Technology Inc. (NASDAQ:GCT) in October with a ‘Buy’ rating and $26 price target and reiterated a ‘Buy’ rating on the stock in March.
T7. QuantaSing Group Limited (NASDAQ:QSG)
Number of Hedge Fund Shareholders: 3
IPO Price: $12.50
Current Price (as of June 9): $8.98
QuantaSing Group Limited (NASDAQ:QSG) shares have generally trended down since the company’s IPO in late January, save for a brief spike on May 24 that shot shares up as high as $19. They’ve since given back the majority of those gains however and remain 28% below their IPO price.
As with GigaCloud, the news surrounding Chinese online education provider QuantaSing Group Limited (NASDAQ:QSG) has generally been positive despite the stock’s overall slump on the market. For the company’s fiscal Q3 period, which ended March 31, revenue rose by 17% year-over-year, and the company expects that figure to exceed 20% during the current quarter. The company was also profitable on an adjusted earnings basis.
Millennium Management, Ken Griffin’s Citadel Advisors, and Chris Rokos’ Rokos Capital Management were all long QuantaSing Group Limited (NASDAQ:QSG) at the end of Q1.
6. Bruush Oral Care Inc. (NASDAQ:BRSH)
Number of Hedge Fund Shareholders: 5
IPO Price: $4.16
Current Price (as of June 9): $0.30
Five funds went long Bruush Oral Care Inc. (NASDAQ:BRSH) in the third quarter of 2022, during which the electric toothbrush maker had its IPO. That figure rose to six in the following quarter and remained flat during Q1 of this year. Hal Mintz’ Sabby Capital added BRSH to its 13F portfolio during the latest quarter, while Steven Boyd’s Armistice Capital sold off its stake.
The IPO price for Bruush Oral Care Inc. (NASDAQ:BRSH) is somewhat misleading, as the initial units being sold at $4.16 each included one share as well as a warrant to purchase an additional share at the $4.16 price point. Nonetheless, BRSH shares were trading at just over $2 on their first day of trading and have since slumped to $0.30.
Bruush Oral Care Inc. (NASDAQ:BRSH) recorded record sales in November of $500,000 for the month, up by 50% year-over-year. The company is also in the process of adding several oral care products to its lineup, which it predicts will help drive greater order values among the 38,000 active subscribers of its brush head refill program.
For more details on the company’s plans to disrupt the oral care market, check out Brüush CEO Aneil Manhas Talks Opportunities in the Electric Toothbrush Market and His Disruption Plans.
See why hedge funds like the long-term outlook for Corebridge Financial, Inc. (NYSE:CRBG), Mineralys Therapeutics, Inc. (NASDAQ:MLYS), and Third Harmonic Bio, Inc. (NASDAQ:THRD) by clicking the link below.
5. Third Harmonic Bio, Inc. (NASDAQ:THRD)
Number of Hedge Fund Shareholders: 9
IPO Price: $17.00
Current Price (as of June 9): $5.08
Third Harmonic Bio, Inc. (NASDAQ:THRD) shares plunged from $19 to less than $5 in mid-December after the clinical-stage biotech discontinued its trial for THB001 in patients with chronic inducible urticarial after two of the trial patients contracted asymptomatic liver transaminitis.
Jefferies responded by dropping Third Harmonic Bio, Inc. (NASDAQ:THRD) to ‘Hold’ from ‘Buy’ and slashing its price target on the stock to $3.60 from $30, while LifeSci Capital also dropped its rating on the stock to ‘Market Perform’ from ‘Outperform’ and removed its price target.
Side effects aside, Third Harmonic Bio, Inc. (NASDAQ:THRD) is nonetheless bullish on the efficacy data from the trial and believes its future KIT inhibitor candidates will build on the last trial’s results. The company also has enough cash at present to last in until early next year. OrbiMed Advisors, which is founded by Samuel Isaly, owns nearly 5.78 million shares of THRD.
T3. Hesai Group (NASDAQ:HSAI)
Number of Hedge Fund Shareholders: 13
IPO Price: $19.00
Current Price (as of June 9): $9.07
Chinese sensor maker Hesai Group (NASDAQ:HSAI) is beginning to reap the rewards of greater autonomous car production in China, as the company delivered record results for the quarter ended March 31. Revenue surged by 73% to $61 million as the company shipped over 28,000 ADAS lidar sensors during the quarter, compared to just 222 a year earlier.
That appears to be just the tip of the iceberg for Hesai Group (NASDAQ:HSAI), which projects to grow its lidar sensor shipments by another 40% quarter-over-quarter in Q2. It’s projected that more than 1 million semi-autonomous smart cars will be delivered in China over each of the next three years, so there’s an incredible near-term (and certainly longer-term) runway ahead of Hesai.
Chris Rokos’ Rokos Capital Management and Israel Englander’s Millennium Management each added more than 170,000 shares of Hesai Group (NASDAQ:HSAI) to their 13F portfolios in Q1.
T3. Prime Medicine, Inc. (NASDAQ:PRME)
Number of Hedge Fund Shareholders: 13
IPO Price: $17.00
Current Price (as of June 9): $15.01
Gene-editing biotech Prime Medicine, Inc. (NASDAQ:PRME) has been attracting some big names in the hedge fund industry, including Cathie Wood’s ARK Investment, which owned 1.92 million shares on March 31 and has continued buying shares of PRME in the second quarter.
Prime Medicine, Inc. (NASDAQ:PRME) has ambitious goals to say the least, as the company aims to build gene-editing technology that it believes could allow it to wipe out up to 90% of the disease-causing mutations currently known. The company has a long road ahead of it, but is already well set-up financially, with enough cash to fund its operations for another two years.
Stifel analyst Dae Gon Ha believes Prime Medicine, Inc. (NASDAQ:PRME) has improved upon prior gene-editing technology, but notes that there are few near-term catalysts to drive the stock higher. He nonetheless has a ‘Buy’ rating and $18 price target on it.
2. Corebridge Financial, Inc. (NYSE:CRBG)
Number of Hedge Fund Shareholders: 22
IPO Price: $21.00
Current Price (as of June 9): $16.89
Stuart J. Zimmer’s Zimmer Partners owns the largest of the 22 long positions in Corebridge Financial, Inc. (NYSE:CRBG) held on March 31 by the select group of hedge funds tracked by Insider Monkey’s hedge fund database. Several other funds own more than 2 million shares of CRBG, including Harris Associates, Ken Griffin’s Citadel Investment, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Corebridge Financial, Inc. (NYSE:CRBG), which was spun off from American International Group, Inc. (NYSE:AIG) last year, has over $365 billion in assets related to the retirement and insurance fields. AIG remains the firm’s largest shareholder and is beginning to unwind some of that overhang, recently pricing a secondary offering of 65 million shares at $16.25 per share.
Biased though it surely is, AIG also has a $68 price target on the stock. Bank of America on the other hand also has a ‘Buy’ rating on CRBG shares, but with a $26 price target.
The Oakmark Equity and Income Fund discussed some of the positives it sees in Corebridge Financial, Inc. (NYSE:CRBG) in the fund’s Q1 2023 investor letter:
“We added two new positions, Corebridge Financial, Inc. (NYSE:CRBG) and Wendy’s, in the quarter. Corebridge is a life and retirement company that was partially spun off from American International Group (AIG) through an initial public offering last fall. Corebridge has extensive, long-standing relationships with many of the largest financial institutions to sell various retirement products. It is also one of the largest retirement service providers to the education market through VALIC Financial Advisors. It also operates a high performing, seasoned life insurance business. The market is valuing the company like it is just a variable annuity provider despite its much more diversified and stable earnings stream. Part of the discount is due to the lack of liquidity and an overhang from AIG’s 77% ownership, which will eventually be brought to market. Trading at five times our estimate of normalized distributable cash flow, the stock is highly attractive to us, and we are willing to wait for the ownership overhang to resolve itself.”
1. Mineralys Therapeutics, Inc. (NASDAQ:MLYS)
Number of Hedge Fund Shareholders: 24
IPO Price: $16.00
Current Price (as of June 9): $15.34
Topping the list of struggling IPOs to buy for the long-term is Mineralys Therapeutics, Inc. (NASDAQ:MLYS), which counted 24 of the hedge funds tracked by Insider Monkey’s database as shareholders as of March 31. The top shareholder of the company is Srini Akkaraju and Michael Dybbs’ Samsara BioCapital, while Peter Kolchinsky’s RA Capital Management also holds a large MLYS position.
Mineralys Therapeutics, Inc. (NASDAQ:MLYS) is a clinical-stage biopharmaceutical company focused on developing treatments that target elevated levels of aldosterone, which typically result in high blood pressure and low potassium levels. The company recently dosed its first patient in a trial for lorundrostat in patients with uncontrolled or resistant hypertension.
Several firms have ‘Buy’ ratings and bullish price targets on Mineralys Therapeutics, Inc. (NASDAQ:MLYS) given their optimism about the potential for the company’s treatments. Bank of America has a $39 price target on the stock and predicts $2.4 billion in sales of lorundrostat by 2035, while Guggenheim has a $32 price target and sees “multibillion dollar” potential for aldosterone synthase inhibitors like lorundrostat.
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Disclosure: None. 10 Struggling IPOs To Buy For The Long-Term is originally published at Insider Monkey.
