The AI Lemonade-focused insurance company (LMND) yesterday opened 73% of its $ 29 IPO price, and closed the day at 140%.
The Lemonade IPO is the latest in a series of great performances from day one. The IPO of Inari Medical Inc. (NASDAQ: NARI) saw a 124% increase above the offer price, while US video interaction company Agora Inc. (NASDAQ: API) received 152%, and Used Online Vroom Inc. (NASDAQ: VRM) gained 117%.
IPOs with big gains in the first day on the offer price pose two questions for investors and companies. First, a big IPO pop indicates that the company has underestimated its shares and raised less money than it could have gotten from its IPO. Second, because of the gargantuan gains for privileged investors obtaining an initial public offering allocation from insurers, access to the company’s shares is not equal and fair.
For these reasons, some people advocate direct listings. Before the collapse of the travel industry due to the virus, Airbnb, Inc. (AIRB) was considering a direct listing rather than a traditional IPO.
For other IPO debuts this year, and upcoming IPOs, see Seeking Alpha’s IPO Coverage and IPO Research Services.
