Why did Amplitude Healthcare break $10.00 on Day-One?
As previously mentioned in the SPACInsider newsletter two week ago, the fourth quarter is an especially tough time for Day-One SPAC IPO share prices, particularly in the months of November and December. In fact, as you can see below, for both 2017 and 2018, the average Day-One IPO price for the months of November and December are significantly below the monthly average for the rest of the year. As theorized, this is due to SPAC investors protecting their end of year P&L (any sign of weakness or trouble, they’re selling) and a necessary rotation of capital to free up money for additional IPOs. So it’s not too surprising to see Amplitude Healthcare (AMHCU) struggle on their Day-One debut, however, trading down to $9.95 IS a little surprising. Something more like $10.00 would have been expected.
Mostly likely in addition to the above reasons posited, there’s a real sense of deal fatigue. We’ve had a record number of SPACs this month on top of a record year. Plus, we have two more IPOs expected to price tonight. Investors (and SPACInsiders) are a little weary of all the new issuance. However, there is also probably an element of BMO being a new SPAC underwriter. SPAC investors are a unique breed and having a little SPAC pricing experience under the belt helps.
On the other hand, Software Acquisition Group Inc. (SAQNU) has traded as high as $10.08 today and if rumors are true, B. Riley cut back allocations hard. SAQNU is B. Riley’s third left-lead deal this year, on top of three in 2018, so that additional experience certainly helps when putting together a book.
However, if the above chart is a sign of what we can expect going forward for additional Day-One prices, it’s going to be challenging. Nonetheless, we have Cantor’s PropTech Acquisition Corp. (PTACU) pricing tonight and Cantor has been averaging a Day-One close price of $10.10 all year, so it should be interesting to see if they can maintain that average in this Q-4 IPO environment. No pressure Cantor….