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Lemonade and Accolade open sharply higher as public markets rally
Despite today’s bucket of plus-and-minus economic data, stocks are heading higher in regular trading. And among the shares rising the most are today’s two venture-backed IPOs: Lemonade and Accolade.
TechCrunch wrote this morning that the firms’ aggressive IPO pricing arcs boded well for the IPO market itself, that investors were willing to price growth-y shares of unprofitable companies with vigor, which could help other companies looking at the public markets get off the sidelines.
Then the two companies opened sharply higher, and at the current moment stand as follows (Data via Yahoo Finance):
- Lemonade: $61.62 per share, up $32.62 or 112.48%
- Accolade: $34.39 per share, up $12.39 or 56.32%
Yep those are big numbers.
Expect the regular round of complaints that the firms were mispriced (maybe) and could have charged more from their equity in their public debuts (again, maybe). But for the two companies, it’s still a lovely day. Pricing above range and then seeing public investors frantically bid your equity higher is much better than the alternatives.
How the companies will fare when they report earnings (Q3 is upon us, making Q2’s earnings cycle just around the bend) will help settle their real valuations. But, for today at least, Lemonade and Accolade have done their yet-private brethren a solid by going up and not down.
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As the IPO market warms, Accolade targets billion-dollar debut
As the IPO market heats up, one offering slipped beneath our radar. This morning, then, we’ll catch up on Accolade’s initial public offering and what its proposed pricing may tell us about the state of the IPO market.
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Catching everyone back up, Accolade sells its service to employers who in turn offer it to their employees; the company’s tech provides a portal for individuals to “better understand, navigate and utilize the health care system and their workplace benefits,” Accolade states in its S-1 filings.
The firm goes on to point out that the U.S. health care system is complex, which puts “significant strain on consumers.” Correct. Its solution? To help “consumers make better, data-driven health care and benefits-related decisions” through its service by selling a “platform to support and influence consumer decision-making that is built on a foundation of mission-driven people and purpose-built technology.”
Yeah.
Regardless of that verbiage, Accolade’s business has proven sufficiently attractive to allow the firm to file to go public in late February, around when Procore filed. Both companies delayed their offerings, but Procore raised more private capital, a $150 million round that values it at around $5 billion. Accolade, to our knowledge, did not raise more funds. So, its IPO is back on and today we have its pricing interval.
Let’s unpack its pricing range, write some notes on its recent financial results and try to figure out how ambitious Accolade is being in terms of its expected valuation as it counts down to trading publicly.
Accolade’s S-1/A
According to Accolade’s June 24th S-1/A, the company expects a $19 to $21 per-share IPO price range. The company intends to sell 8.75 million shares in its debut, not counting a 1,312,500 share greenshoe option offered to its underwriters. Discounting the extra shares, Accolade would raise between $166.3 million to $183.8 million in its debut; inclusive of greenshoe shares, the total fundraise grows to a range of $191.2 million to $211.3 million.
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