It's an IPO showdown.
With the office-sharing giant WeWork, the SmileDirectClub company and the home fitness player Peloton, who are expected to go public in the coming weeks, some are looking for further IPOs in 2019.
These include the overwhelming success of the fake-meat maker Beyond Meat, as well as the not-so-fierce shares of the ride-hail companies Uber and Lyft, which closed on Tuesday after months of weakening performance to historic lows.
But the poor performance of Uber and Lyft could make the upcoming offer for individual investors much more attractive, says Kathleen Smith, chair and co-founder of Renaissance Capital, and the brain behind her company's above-average IPO ETF.
"I think Uber and Lyft's bad trading will be a big buy-side advantage, investors," Smith said Wednesday on CNBC's ETF Edge. "All of these companies will have to satisfy a rather nervous group of investors who have already burned down on some of those big flotations that lost money." For one thing, Uber lost most of its money to its IPO in the last twelve months than any other IPO ever, Smith said. The second largest loser in the history of the IPO? WeWork, followed by Lyft, she said.
As a result, thinking about WeWork is difficult, not thinking about Uber, Smith said. "If you look at the performance of these IPOs, they will not do you any good, it will be up to WeWork and, for a number of reasons, to bring that rating down to a low level."
CNBC's David Faber reported on Thursday WeWork's valuation targets would be drastically reduced from the original $ 47 billion private valuation, and the company would hold itself back next week to hit the public market.
Despite the risk of the Renaissance, the IPO ETF ̵
"The nice thing is that although Uber was in the top 10 position in our product, we had some very strong names, including Roku, the ETF's second largest position, with a weighting of nearly 8%, Smith said.
"I looked at all other ETFs and who has the biggest stake [in Roku]" It's our IPO ETF, "Smith said. "The second largest … is less than 2% of any other ETF on the market, so we get exposure to investors in these new stocks that are not included or underweight many other indices."
That's why Renaissance's IPO ETF is considered by Smith to be the only pure game for newly listed companies. A passive fund that holds the largest and most liquid shares of new companies for two years, redistributes quarterly and is an exception to the largest IPOs. For Smith, he is "the only ETF in the market that has a pure exposure to the IPO space.
While Uber and Lyft's recent appearances have brought some frightening headlines, some see the IPO ETF as a great way to succeed on a fundamentally sound IPO market.
"It was absolutely on fire," said Dave Nadig Director of ETF.com, in the same "ETF Edge" interview. "It really comes down to this consistent, accurate rating [down] .You want IPOs to go up one or two percent on the day of their release, we've seen some of them, and then people are learning these stocks, ifs they'll go into Kathleen's fund, and they'll get that performance. "
The IPO ETF gained less than 1% on Thursday.