MNTN Inc and Hinge Health waited out the volatility in the market due to tariffs and were handsomely rewarded. Each deal had at least five points of premium at first trade.
MNTN (MNTN US) has star power in its C-Suite and now has a similar standing on Wall Street.
MNTN Inc., a self-serve software platform enables marketers to precisely target audiences through their MNTN Matched technology, priced a full-size deal of 11.7mm shares at the high-end of the range, $16.00, and opened at $21.00 for a gain of 31.3% at first trade. The fireworks continued as the stock traded to a high of $26.88 before closing its opening session at $26.36 for a first day return of 65%.
The company’s Chief Creative Officer, actor Ryan Reynolds, was featured on the company’s virtual roadshow and may have assisted in sparking up investor interest.
Or maybe his rich, Hollywood buddies got in on the deal too…
The deal was considered multiple-times oversubscribed and our sources stated that the final deal finished north of 12-times oversubscribed. The deal featured a significant $30 million anchor order from BlackRock and 5% of the shares in the deal were earmarked for “friends and family”.
The stock traded as high as $32.49 in its second session for a top tick of 103.1% before closing the week at $27.71
IPO Boutique Commentary
In our opinion, this deal was an “aspirational” story and the company did a great job of “selling itself” to investors — a sign of a good marketing company. Diving into the financials briefly, MNTN’s valuation was around a 5x multiple of the $245m in sales generated over the trailing 12 months. In the first quarter, MNTN generated $9.4m of adjusted Ebitda while growing revenue by 47%. The company had 19 quarters of positive adjusted Ebitda over the last 25 quarters.
With all this being said, investors believed that MNTN had a runway for additional growth in a crowded marketing space and bid the stock higher.
The grand vision and a solid core of backers assisted in the success of this IPO. We were admittedly “skeptical” of the transaction but the proof is in the pudding (or the stock price). The underwriters and company did a nice job of creating scarcity in this IPO by electing to not upsize the transaction. The fervor was felt with a precipitous rise at open and in the aftermarket. Kudos to the underwriting lineup on this big win!
Hinge Health (HNGE US) marks another win for the IPO market in the month of May.
Hinge Health, a company that leverages software, including AI, to largely automate care for joint and muscle health, priced a full-size deal of 13.666mm shares at the high-end of the range, $32.00. The stock opened for trading after a lengthy paring process at $39.25 for a gain of 21.9% at first trade.
Hinge Health hit a first day high of $40.26 or 25.8% above the issue price before selling off a bit. The stock closed its first day at $37.56 or 17.3% above issue. On day two the stock enjoyed a bid and traded as high as $40.86 before closing the week near its highs at $40.16.
According to our sources, the deal finished north of 15-times oversubscribed. The price guidance entering pricing evening was that the deal could price at the “high-end or above the $28-$32 range”. Ultimately, the final price settled at the high-end of the range leaving some “juice” at opening print for issuance buyers. We are told that the deal was made more “exclusive” with one-third of the book being completely shut-out. We have heard that allocations were largely skewed to U.S. investors as well.
IPO Boutique Commentary
We believe the company was well-received due to an attractive valuation versus its previous 2021 round in combination with growing metrics. Furthermore, the underwriters and company did a nice job of creating “aftermarket demand”. The pre-IPO demand was strong enough (in our opinion) to warrant an above range outcome or even an upsized transaction, however neither outcome occurred which assisted in the positive price action on days one and two. .
It should be noted that another virtual healthcare provider, Omada Health, recently filed for its IPO and is good evidence that the space has matured over the course of recent years. We anticipate Omaha Health “could” be well-received due to the strong action of Hinge Health.
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