Best and Worst IPOs of 2015 – and What’s Next on the IPO Calendar

It's nearly the midpoint of the year, so it's time to look at the best and worst IPOs of 2015, and what's scheduled on the IPO calendar for the rest of the year...

Let's get right to the winner and loser...

The best and worst IPOs of the year for share-price performance to date were Shake Shack Inc. (NYSE: SHAK) and Etsy Inc. (Nasdaq: ETSY).

SHAK is the best-performing new stock of 2015 to date and has gained 66.9% since its Jan. 30 debut. Meanwhile, ETSY is the worst-performing IPO of the year, having fallen 46.7% in the two months it's been on the market.

That's among a less impressive group of new stocks than we had last year. This year's IPO calendar so far has been lackluster compared to last year's record-breaking performance.Q1 IPOs

There were 273 IPOs in 2014. Last year's IPO market was the most active since 406 companies went public in 2000 at the height of the dot-com bubble. It was also the second year in a row in which there was at least one IPO each week.

But 2015 has been dramatically slower as companies remain wary of volatile currency markets and global interest rate movements.

Now that we're nearly halfway through the year, here's a look at the best and worst IPOs of 2015, and what's ahead on the IPO calendar this year...

The Best and Worst IPOs of 2015: Q1

The first quarter of 2015 saw 34 IPOs raise $5.4 billion. According to Renaissance Capital, a manager of IPO-focused ETFs, that makes it the least active quarter by IPO count since Q1 2013. It was the smallest by funds raised since Q3 2011.

The best and worst IPOs of Q1 2015 were Shake Shack Inc. (NYSE: SHAK) and Zosano Pharma Corp. (Nasdaq: ZSAN), respectively. ZSAN stock is down 30.1% since hitting the market on Jan. 26.

Healthcare companies made up 47% of all IPOs in the first quarter, with 16 deals. That total was still lower than in any quarter last year.

The decline wasn't limited to health care. It occurred across every sector, particularly energy and technology. The energy sector saw only two companies go public. There were only four tech IPOs in Q1 - down from 14 during the year-ago quarter.

However, the lagging energy and tech sectors provided the two largest IPOs of the quarter. Natural gas company Columbia Pipeline Partners LP (NYSE: CPPL) raised $1.1 billion in its February debut. Cloud analytics firm Inovalon Holdings Inc. (Nasdaq: INOV) raised $600 million and is up 11.9% from its IPO price.

The number of profitable companies going public also fell significantly in Q1...

Only 10 of the 37 companies that hit the market last quarter were profitable. That's a 43% decrease from the first quarter of 2013. GoDaddy Inc. (NYSE: GDDY) was the fourth largest IPO of the first quarter despite not having turned a profit in its 18-year history.

Companies holding IPOs have lower revenue growth too. According to Fortune, most companies that went public in 2013 boasted sales growth of 50% over the previous year. This year, it's about half of that.

"The IPO used to be a moment of glory," Fortune reported. "Now it's a sign of desperation."

And that desperate trend continued into the second quarter - take a look...

The Best and Worst IPOs of 2015: Q2

The IPO market in the second quarter has been more active than the first quarter. Q2 IPOs

There have been 39 IPOs so far this quarter. That's five more than the first quarter, and there are still more than two weeks left. May was the busiest month of the year with 20 IPOs.

Healthcare led the way again in Q2 with 16 IPOs. Six more healthcare IPOs are expected to price before the end of the quarter.

Energy and tech had five and six IPOs, respectively.

Tallgrass Energy GP LP's (NYSE: TEGP) $1.2 billion deal surpassed Columbia Pipeline Partners as the largest U.S. IPO of 2015. Online marketplace Etsy Inc. (Nasdaq: ETSY) was the most explosive tech deal of the quarter, soaring 88% on the first day and raising $267 million.

Although the Etsy IPO was met with enthusiasm, it's another example of a company whose valuation overshadows its lack of profitability. The company even admitted in its IPO filing that it "may not achieve or maintain profitability in the future." That hard truth has deflated the Etsy stock price by nearly 50%.

Shopify Inc. (NYSE: SHOP) is in a similar situation. The Canadian e-commerce company rushed to market last month despite having lost nearly $35 million over the last decade. Like Etsy, Shopify told investors not to expect profits anytime soon.

After seeing the best and worst IPOs of 2015, investors are looking ahead to the second half of the year. Here's what they can expect...

How Does the Second Half of the 2015 IPO Calendar Look?

The last two quarters on the 2015 IPO calendar look promising as the energy and tech sectors keep growing.

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The Tallgrass Energy and Columbia Pipeline IPOs prove investors are pouring money into big energy companies right now. Energy IPOs have raised $3.9 billion in proceeds - more than any other sector this year.

The sector's strong performance shows the market is still receptive to energy deals despite low oil and natural gas prices. In fact, more companies will want to go public as oil prices rebound throughout the year due to increased profitability during high price periods.

Then there's tech...

According to The Wall Street Journal, there are 98 startups valued at $1 billion or more by venture capital firms. Many of them, including Xiaomi and Uber, have gone through several rounds of funding and are expected to hit the market later this year.

Unlike Etsy and Shopify, these startups aren't prematurely rushing into an IPO. They are instead waiting until they've developed long-term growth strategies before becoming public companies.

The Bottom Line: The 2015 IPO calendar struggled to maintain 2014's momentum. As the best and worst IPOs show us, some companies rushed to market too early, causing their stocks to fall and injecting bearish sentiment into the IPO market. But the rest of the year will see increased IPO activity as the energy sector stabilizes and tech startups patiently wait to go public.

What do you think about the best and worst IPOs of 2015? Talk to us on Twitter at @AlexMcGuire92 and @moneymorning.

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