IPO Winners & Losers: Jersey Mike's, Bubble Baths, and Biotech Wins

Welcome back to Renaissance Capital's IPO Winners and Losers, the weekly podcast breaking down the biggest stories shaping the IPO market. 

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This week: 
• Scribe Therapeutics pops 44%, with strategic investments from Eli Lilly and Sanofi 
• Jersey Mike's preps the largest consumer IPO in 2+ years at an $8.9 billion valuation 
• Reformation prepares to be the market's first DTC name in years 
• Ionic Digital's direct listing tests the bitcoin-miner-to-data-center pivot 
• The IPO Index slips alongside a broader growth selloff on AI concerns and the Iran war

We also discuss whether the consumer IPO is finally back after a year on the bench, what Jersey Mike's pricing means for the entire restaurant pipeline behind it, and why biotech's 60%+ average returns keep pulling the next wave of deals forward.

Transcript

SPEAKER_00 0:01

This week's winner, biotech, continuing its white hot comeback. This week's loser, anyone still waiting for AI infrastructure to carry the whole market?

SPEAKER_01 0:10

And with two PE-backed consumer names testing a sector that's been benched all year, the question is simple. Is the consumer IPO finally back? Let's get into it with this week's winners and losers.

SPEAKER_00 0:25

Welcome to the IPO Winners and Losers podcast. I'm your host, Avery Marquez, Renaissance Capital's Director of Investment Strategies.

SPEAKER_01 0:32

And I'm Matt Kennedy, senior strategist at Renaissance Capital. And Avery, I kind of feel like a loser myself today because I've got a cold. So hopefully it doesn't mess up the uh sound quality.

SPEAKER_00 0:43

No, it sounds it's very uh it's a little bit lower, so very uh radio-esque.

SPEAKER_01 0:48

Oh, nice.

SPEAKER_00 0:50

Uh so a quick note before we dive in: this podcast is for informational purposes only, and nothing we discuss should be taken as investment advice or recommendation to buy, sell, or hold any security. Past performance does not guarantee future results, and one cannot invest directly in an index. For the full disclosure, check the end of this recording. So let's walk through the week because the headline isn't what's what priced, it's what's coming. Uh, we had just one IPO this past week, so fairly quiet on paper. But the setup for next week is the story. We have the consumer sector poised for a real return.

SPEAKER_01 1:23

Yeah, two PE bet consumer discretionary names, uh Jersey mics and reformation. The consumer sector has taken a backseat for most of 2026. Uh, the names that did go public didn't do especially well. But for investors that are worried about AI disruption or they just like these brands or want a company without an insane amount of capex, these two can offer that investment opportunity. And if they do well, I think more consumer IPOs will certainly line up.

SPEAKER_00 1:49

Mm-hmm. Yeah, these are gonna be really telling. Uh but that said, the tape is still soft. Uh the IPO index ended the week with a loss, lagging the S P 500. Uh, so growth losing more steam on AI concerns and the Iran war.

SPEAKER_01 2:03

Right. So a fragile backdrop, but issuers stepping into it anyway. That's the key tension.

SPEAKER_00 2:09

So let's look to the calendar. Uh, and we can start with a name everyone should know. Uh Jersey Mike's. It's that blackstone-backed sandwich chain gearing up to raise $1 billion. And that would make it the largest consumer IPO in more than two years.

SPEAKER_01 2:23

That $8.9 billion valuation, though, pretty ambitious given how uh restaurant stocks have traded this year. The popularity is undeniable, but the valuation is the debate.

SPEAKER_00 2:34

And the pitch here is global expansion. Uh, this company has a big base in the US. Uh it's also building a small footprint in Canada, but it's planning to open its first UK locations later this year. Um, the issue is that it's priced like the expansion has already worked. They're asking investors to put a good amount of faith in the growth story.

SPEAKER_01 2:54

Yeah, I think the company can achieve a premium eBet Down multiple. I'm just a little hesitant to say it deserves it right off the bat. Uh the leverage also increases the risk here a bit, uh, but it's definitely an important deal. This is an IPO with an audience, namely every restaurant restaurant IPO in the pipeline. Uh that includes Inspire Brands, the owner of Jimmy John's, Duncan, and Arby's. Uh, you've also got Panera brands, uh, maybe even P.F. Chang's, Cooper's Hawk, and Joe and the Juice, though those three kind of seem further away. All of them watching this print.

SPEAKER_00 3:26

Yeah, I think Inspire Brands is definitely uh a big one. Um Duncan. I I know when I saw I like Inspire Brands, I don't I have no idea who that is. Uh and then I see that they own Dunkin'. It's like, uh oh. Okay. Um, but yeah, Jersey Mics may be just a sandwich chain to some. But to the IPO pipeline, it's going to be the read on whether the whole restaurant category can come public again. Um, and I have a very serious question for you, Matt. What is your go-to sandwich order?

SPEAKER_01 3:54

Oh, uh Avery, you know I'm a man of simple tastes. Uh I I my go-to sandwich is just plain white bread slathered in mayonnaise, you know.

SPEAKER_00 4:04

Wow.

SPEAKER_01 4:05

No, just kidding. I'm I go for the Italian. I was gonna be boring, but no, I think Italian is my go-to. Yeah, it's it's so good.

SPEAKER_00 4:14

Yeah, no, that's classic. I think I was gonna say the same thing.

SPEAKER_01 4:17

The meatball is pretty good too. Uh, I do like a good meatball, but uh yeah, can't go wrong with the Italian.

SPEAKER_00 4:23

Mm-hmm. So thinking about consumer more broadly, there's another big note here: the return of a category we haven't seen in years. Premiere-backed Reformation uh would be the first, the market's first DTC company in years. Uh, and that's notable, especially given how big the DTC craze was back between 2019 and 2021.

SPEAKER_01 4:46

Yeah, the profile here is just classic DTC DTC. Uh, you've got above average growth, below average EBITDA margins. So growth for margin, the trade-off investors keep relitigating.

SPEAKER_00 4:57

And per the newsletter, the roadshow was edgy. So make of that what you will.

SPEAKER_01 5:03

Yeah, I did watch it. Um, I think they made fun of CFOs named Brad. So I can imagine a lot of finance bros invests were offended, but then they had a model in a bubble bath talking about their growth ganger. So I bet a lot of finance bros were intrigued. The marketing is kind of strange. Uh it's a it's a strange juxtaposition for a private equity-backed company. They're doing a dividend recap and a synthetic secondary, and at the same time, they're talking about being this authentic, cool girl brand. Uh it's interesting, but uh I think the the growth and the gross margin are really the story here. Um they say they don't do much discounting, which investors like, but the EBITDA margin is kind of surprisingly low given that 60% plus gross margin. Uh this company has been around for a while, but a lot of those 2021 DTC brand IPOs didn't really pan out. So we'll see if that weighs in the deal. At the end of the day, though, IPO buyers care more about those fundamentals than the uh cool girl vibe.

SPEAKER_00 6:04

Yeah, I think that's that's the big point here. Um it's like yeah, it makes me think back to like 2021 when it was like all the prospectuses, they had the color coding and the pretty font, and um yeah, investors I think don't care about that, especially right now.

SPEAKER_01 6:22

Yeah, they had to do something really splashy to stand out back then. This kind of reminds me of that too, yeah.

SPEAKER_00 6:28

Yeah. Um, but I think if a DTC name can make it to market and do well, it would reopen a door that's been shut for a pretty long time.

SPEAKER_01 6:35

Yeah.

SPEAKER_00 6:37

Um, so as we've said several times over the past few weeks, AI infrastructure has cooled, but listings in this space are down, not out. Uh we have Ionic Digital on for next week. Um, this company was recently valued at $2.4 billion. So this would be the largest direct listing since 2021.

SPEAKER_01 6:55

Yeah, the the mechanism is the story here: a direct listing, not a capital raise. It's a Bitcoin miner pivoting to data center leasing.

SPEAKER_00 7:03

Yeah, it's a pivot that has started to become a trend, not really an exception. Um, several miners have repurposed their power and infrastructure for the AI wave. Uh, and that should probably continue as companies sprint to capitalize on compute demand.

SPEAKER_01 7:17

Yeah, I'll call it uh smart adjacent adjacency. Uh you already have the power draw and the real estate. Data centers need both. I think I was asked this week if this was kind of like the Allbirds pivot. And I said no, there's uh a real business here. They've got that signed $2 billion lease agreement with NScale, and they recently raised $400 million from institutional investors. Uh JP Morgan is the financial advisor on the direct listing, so big name there.

SPEAKER_00 7:45

Yeah, it's funny. Uh Allbirds, one of those crazy uh DTC names.

SPEAKER_01 7:50

And yeah exactly. Oh, there's good tie-in, yeah.

SPEAKER_00 7:54

Um, so yeah, let's talk about the actual print this week now. Uh, because biotech quietly keeps delivering. We had just one IPO, Scribe Therapeutics. Uh, this company upsized, priced at the $15 high end, and then popped 44%. Um, this company's pretty early stage and it's doing gene silencing for cardiovascular and metabolic diseases. Um, but the real thing is its main focus, which is high cholesterol. So a huge end market.

unknown 8:21

Right.

SPEAKER_01 8:21

And here's the nuance. Uh, it priced at a more than 50% discount to its last private round in 2021. So it's a great debut off of a reset valuation.

SPEAKER_00 8:31

Yeah, and there's a strategic tell in this deal. IPO investments from Eli Lilly and Sinofi. Um, that's a potential MA angle sitting right there. In a year, that's been huge for acquisitions in this space.

SPEAKER_01 8:43

Right, such an important pattern here. Uh, this year's biotech IPOs now average a more than 60% return from offer. That kind of scoreboard pulls the pipeline forward.

SPEAKER_00 8:53

Yeah, and there are six six more biotechs waiting in the pipeline. So with returns like that, uh, we expect them to move.

SPEAKER_01 9:00

Yeah.

SPEAKER_00 9:00

Yeah. And now to the scoreboard for existing new stocks. Uh it was another down week, but there was movement underneath. Uh the IPO index end of the week off 2.5% compared to the SP, which was off 0.6%. So new stocks are slipping, uh, and growth is the reason. It's kind of pinned on these AI concerns plus the Iran War.

SPEAKER_01 9:20

Yeah, uh looking under the hood a bit, Tempest AI was the week's IPO index loser off almost 19%, an ideal to buy the diagnostics firm personalis. Uh MA, not always rewarded right now.

SPEAKER_00 9:32

Yeah, and on the other side, we had equipment share.com, which rebounded 17% after raising 2026 guidance. So we're starting to see that fundamentals are still getting attention, um, and good numbers can translate to gains.

SPEAKER_01 9:45

So it's not a blanket risk off. It's discriminating. Uh raise guidance, you're rewarded. Buy growth into uncertainty, you're not.

SPEAKER_00 9:53

Mm-hmm. Uh so zooming out now, what's this whole setup actually telling us? Uh the story is broadening. Biotech's been working, uh, and now consumer is stepping off the bench to test the breadth.

SPEAKER_01 10:06

But into some fragility too. Uh the IPO index down on the week, growth wobbling on AI and Iran. Issuers are moving despite the tape, not because of it.

SPEAKER_00 10:15

Yeah, that's an important read. Uh, we have Jersey Mics, Reformation, Ionic, three names in what have been less than favored categories, all making an attempt at once.

SPEAKER_01 10:25

So the risk is probably the timing here. Uh a shaky backdrop is a hard window for a billion-dollar restaurant deal or the first DTC name in years.

SPEAKER_00 10:34

But if they clear, it says the market's deeper than the index suggests. Uh that's the bet these issuers are making.

SPEAKER_01 10:40

Right. And the Appio index is still beating the SP 500 year to date, even if new stocks have come down from their recent highs.

SPEAKER_00 10:49

All right. So what are we watching next week? Uh first off, jersey mics above everything, the largest consumer deal in two years. Um, and the read for the entire restaurant pipeline behind it.

SPEAKER_01 11:00

And then reformations, pricing, and trading. Uh, can a DTC name clear into this tape? Uh there's no recent playbook here, so that'll be a first in a while.

SPEAKER_00 11:10

Then Ionic Digital Store Listing, the structural signal on whether the miner to data center pivot has real investor appetite.

SPEAKER_01 11:18

And of course, the emerging theme, the biotech pipeline, we've got six names behind Scribe, all watching that strong performance, ready to move forward. So we've got two or three weeks left before the annual August lull sets in. Let's see who moves.

SPEAKER_00 11:33

Yeah. So that's it for this week's winners and losers. Uh, get the full newsletter in your inbox by clicking the link in the description. Thanks for listening, and before we go, please listen carefully to our full disclosure. This podcast is for informational purposes only. Renaissance Capital statements should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Certain of the statements contained may be statements of future expectations and other forward-looking statements that are based on Renaissance Capital's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those expressed or implied in such statements. Past performance does not guarantee future results. One cannot invest directly in an index.