Container Store and Qunar Go Ballistic in IPO-Day Trading

Andrew Klips |

Some Initial Public Offerings have had ridiculous first days of trading, coming out of the gates far above the set IPO prices.  Friday is featured a tandem of companies falling into that category:  The Container Store Group, Inc. ($TCS) and Qunar Cayman Islands Ltd. ($QUNR).

The Container Store, a Coppell, Texas-based retailer of storage and organizational products, offered 12.5 million shares at a price of $18.  That was above the original range of IPO pricing, which was set at $14 to $16 per share as it prepared to begin trading on the NYSE.

The company finds itself uniquely positioned in a niche market will relatively little competition.  Some may view retailers such as WalMart (WMT) or Target (TGT) as a threat, but realistically the competitive threat is minimal to a specialist like The Container Store in the highly fragmented segment.

As noted in Equities’ analyst Francis Gaskins’ IPO Report on TCS:  The Container Store operates 62 stores in 22 states and had net sales of more than $700 million in fiscal 2012.

The stock took off at the bell, opening at $35 per share and is holding the gains, printing as high as $36.74 just after noon Eastern. 



Of course, anyone that is in already loves the surge, especially insiders.  Chief Executive Kip Tindell told CNBC that 40 percent of Container Store employees own stock.  Tindell is one of the original founders of the company that began 35 years ago.  CNBC reported that insiders’ average price for the stock is around $5 per share.

Another IPO runner on Friday is Qunar Cayman Islands Ltd., a Chinese travel-booking service controlled by Baidu Inc. (BIDU) , China’s largest search engine.  In 2011, Baidu spent about $305 million for a majority stake in Qunar.  Qunar sold 11.1 million American Depositary Receipts (ADRs) at $15 each, well above its initial range of $9.50 to $11.50 as it raised $167 million.

Chinese IPO’s are getting some positive attention this week after years of creative accounting scandals that jaded U.S. investors and resulted in many Chinese firms to exit the U.S. exchanges. Chinese classified ads company 58.com, Inc. ($WUBA) debuted on Thursday, offering 11 million shares at $17 each.  The stock ran as high $27 and is trading today at $25.  58.com is often referred to as “China’s Craigslist.”

Qunar, whose name means “where to go” in Chinese, is the second-largest IPO of a Chinese company in 2013, ranking only behind 58.com, which raised $187 million.  Shares of QUNR have fallen far from intraday highs of $35 (133% gains) in afternoon trading, printing $28.50 to still nearly double the IPO price.

These fresh public issues are having days that put them amongst the best IPO performers this year, which include the likes of Potbelly (PBPB) and Sprout Farmers Market (SFM) , which rifled ahead 119 percent and 122 percent, respectively, on their first day of trading.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
BIDU Baidu Inc. 230.74 -2.80 -1.20 1,358,031 Trade
WMT Wal-Mart Stores Inc. 96.98 0.05 0.05 3,625,167 Trade
WUBA 58.com Inc. American Depositary Shares each repres 69.32 -2.02 -2.83 382,381 Trade
TGT Target Corporation 61.37 -0.39 -0.63 2,904,270 Trade
PBPB Potbelly Corporation 12.85 0.00 0.00 54,381 Trade
SFM Sprouts Farmers Market Inc. 23.72 -0.08 -0.34 940,700 Trade
TCS The Container Store Group Inc. 5.59 -0.08 -1.41 108,595 Trade
QUNR Qunar Cayman Islands Limited n/a n/a n/a 0 Trade
BGII Bgi Inc 0.00 0.00 0.00 10,000

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