Today: After strong end of second quarter, IPO market cools off with trimmed offerings from Silicon Valley firms CareDX and TubeMogul. Also: Earnings from Google and a host of chip companies.
The Lead: CareDX and TubeMogul settle for less in IPO
Silicon Valley IPOs roared back at the end of the second quarter with strong offerings from the likes of GoPro and Arista Networks, but the momentum didn't continue with the first two offerings in the second half.
Brisbane biotech CareDX priced its debut batch of shares at far less than the suggested price range of $15-to-$17, selling 4 million shares for $10 apiece, and then struggled to command that price on the open market, where shares sold between $9 and $9.99 before closing at $9.05. The pricing was a surprise after CareDX's range came in well above its original stated goal of a $50 million windfall, a target the company failed to hit by raising $40 million even as 5 percent of the shares were purchased by board members and other early investors.
CareDX develops genetic testing equipment for heart transplant patients, leveraging new techniques to gauge the likelihood that a patient's body is rejecting the new organ, bringing down the need for high quantities of drugs that are currently used to stave off the risk of rejection. The company, which was founded in 1998 and has changed its name four times in the intervening years while commanding more than $120 million in venture funds, hopes to develop similar tests for the transplant of other organs.
"We believe that better post-transplant surveillance solutions that provide objective, personalized and actionable data can help clinicians control rejection risk while reducing the risk of side effects," the company said in its registration documents with the Securities and Exchange Commission.
While biotech has been the hottest sector in the IPO market so far this year, it received bad news earlier this week when the Federal Reserve cautioned that the valuations of such companies, along with social-media firms, could be overvalued.
"Valuation metrics in some sectors do appear substantially stretched -- particularly those for smaller firms in the social media and biotechnology industries, despite a notable downturn in equity prices for such firms early in the year," the Fed's biannual report read.
TubeMogul isn't in the biotech or social-media fields, but the video-advertising company still slashed its IPO range, from $11-to-$13 to $7-to-$8 in SEC documents updated Thursday morning. The Emeryville firm seems to be struggling to find open arms on Wall Street just like rival Yume, a Redwood City company that priced its shares at $9 last year after stating a range of $12-to-$14 and ended trading Thursday at less than $6.
TubeMogul is expected to announce a final price Thursday evening and begin trading on the Nasdaq exchange Friday morning under the symbol TUBE. CareDX also chose to list on the Nasdaq instead of the New York Stock Exchange and is trading under the symbol CDNA.
SV150 market report: Wall Street suffers ahead of Google earnings
Wall Street suffered Thursday as tech stocks were hit hard ahead of a raft of Silicon Valley earnings reports released after the bell, led by Mountain View Web giant Google.
Google blew away revenue expectations with a 22 percent increase from the same quarter a year ago, generating $16 billion in sales, but profits came in slightly below expectations at $3.4 billion, or $4.99 a share. Google also announced the departure of a longtime executive, Chief Business Officer Nikesh Arora, to Softbank; he will be replaced by Omid Kordestani. Google stock bounced back from a 1.7 percent decline to $580.82 in the regular session, with after-hours action pushing share prices back above $590.
Silicon Valley's other Thursday earnings reports showed that not all chipmakers enjoyed the same breakthrough quarter that Intel showed off earlier this week. Advanced Micro Devices, the chief rival to the Santa Clara chipmaker, continued to post losses, revealing a net loss of $36 million, or 5 cents a share, on sales of $1.44 billion, up just slightly from $1.4 billion in the previous quarter. The Sunnyvale company's shares plunged more than 15 percent in after-hours trading following the announcement, trading for less than $4 after closing with a 1.9 percent decline at $4.57. Two other Silicon Valley chipmakers, Fairchild Semiconductor and Cypress Semiconductor, announced earnings before the markets open, but failed to move the needle much in either direction: Cypress fell 0.4 percent to $10.27 while Fairchild gained 0.3 percent to $15.66.
Silicon Valley's two largest tech firms made board moves after trading ended for the day, with Hewlett-Packard naming CEO Meg Whitman chairman after its interim board leader stepped down earlier this week, and Apple brought on BlackRock cofounder Susan Wagner to replace its longest-serving director, Bill Campbell. Apple fell 1.8 percent to $93.09 on the day, and HP declined 1.1 percent to $34.43. SanDisk had the largest plunge Thursday among the SV150, diving 13.6 percent to $93.21 after announcing earnings that were in line with expectations but apparently not enough to justify its record prices. eBay had a stronger performance after revealing its second-quarter performance, with the San Jose company's shares gained 0.7 percent to $51.03. Social media rivals Facebook and Twitter looked to e-commerce for a boost, with Twitter acquiring CardSpring for payments infrastructure and Facebook testing the ability to purchase items directly on its platform; Twitter declined 1.5 percent to $36.87 Thursday while Facebook fell 1.9 percent to $66.41.
Up: Zynga, Symantec, eBay, Juniper
Down: SanDisk, Intel, Pandora, Salesforce, Workday, Yelp, Gilead, AMD, Facebook, SolarCity, Apple, SunPower, Yahoo, Google, Twitter
The SV150 index of Silicon Valley's largest tech companies: Down 25.64, or 1.67 percent, to 1,507.03
The tech-heavy Nasdaq composite index: Down 62.52, or 1.41 percent, to 4,363.45
The blue chip Dow Jones industrial average: Down 161.39, or 0.94 percent, to 16,976.81
And the widely watched Standard & Poor's 500 index: Down 23.45, or 1.18 percent, to 1,958.12