The Top 5

IPOs of All
Time
What do they have in common?

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The Top 5 IPOs of All Time

You hear it almost every week. If you put $1,000 in Amazon when it went public,
your investment would have grown to well over $1 million today. It’s the
stock-pick of the century.

What are the clues that might have foretold Amazon’s explosive 20-year run-up?
Is there a pattern among top performing IPOs?

To answer those questions, we studied the top performing IPOs of all time to see
if we could detect common characteristics.

We started by searching for the best performing IPOs during their first two years.
To level the playing field, we assumed the investor bought the IPO at the end of
the first day of trading and did not get an IPO allocation.

While these astonishing companies had their own unique fundamental stories, it
was what they had in common that interested us most.

Here are 5 of the top IPOs and their jaw-dropping returns:

Explosive IPO Gains Without an Allocation

Top Performing IPOs IPO Date % Gain Years

Amazon.com (AMZN) May 1997 4,984% 1.7

Google (GOOG) Aug 2014 374% 1.4
Intercontinental Exchange (ICE) Nov 2005 325% 1.3
FireEye (FEYE) Sep 2013 170% 0.5
Canada Goose (GOOS) Mar 2017 328% 1.3

*IPO returns from the first-day close to 2-year peak

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Amazon.com (AMZN)

IPO Date: May 1997

Deal Size: $54 million

Amazon
+4,984% in Twenty Months Market Cap at IPO: $458 million

First-Day Pop: 31%

Subsequent Gain (2-year): 4,984%

CEO at IPO: Jeff Bezos

Amazon went public with $31 million in LTM sales and only 256 employees.

At the time it just sold books and was up against industry heavy hitters Barnes &
Noble ($2.4 billion sales) and Borders ($2 billion).

What distinguished Amazon was its leadership in a new sales channel, the Inter-
net, with 340,000 customer accounts. AMZN’s year-over-year sales growth was a
whopping 2,981%.

Later they became the online “Everything Store.”

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Google (GOOG)

IPO Date: August 2004

Deal Size: $1.7 billion

Google Market Cap at IPO: $24.6 billion

+374% in Seventeen Months

First-Day Pop: 18%

Subsequent Gain (2-year): 374%

CEO at IPO: Eric Schmidt

Although they were a little late to the search party behind Yahoo!, Google’s inno-
vative page ranking search engine was a winner.

In less than six years it had scaled to $2.3 billion in annual sales and became one
of the world’s most widely recognized brands. New products like Google News,
Google Maps and Gmail continued that streak.

Founders Larry Page and Sergey Brin frustrated investors at the IPO roadshow by
refusing to articulate their long-term strategy, saying “If we give it, you’ll keep
asking us to do it.”

To paraphrase Frank Sinatra, “they did it their way.”

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Intercontinental Exchange (ICE)

IPO Date: November 2005

Deal Size: $416 million

Market Cap at IPO: $1.5 billion

Intercontinental Exchange
+325% in Fifteen Months
First-Day Pop: 51%

Subsequent Gain (2-year): 325%

CEO at IPO: Jeffrey Sprecher

Founded by a former power plant executive, ICE went public as the leading
exchange for trading energy derivatives, with 194 employees and $143 million in
LTM sales.

Its early pivot to fully-electronic trading allowed it to scale client volumes while
keeping its costs fixed. ICE doubled down on its successful electronic model when
it acquired Europe’s International Petroleum Exchange.

ICE then led a global consolidation of exchanges, culminating with its purchase of
NYSE Euronext. Today it’s a global leader in derivative and equity exchanges,
securities clearing and financial data services.

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FireEye (FEYE)

IPO Date: September 2013

Deal Size: $304 million

FireEye Market Cap at IPO: $2.7 billion

+170% in Six Months

First-Day Pop: 80%

Subsequent Gain (2-year): 170%

CEO at IPO: Dave DeWalt

This VC-backed company sold investors on its rapid growth and disruptive new
approach to cybersecurity.

FireEye’s platform detonated potential threats in a virtualized environment, a vast

improvement over traditional firewalls and intrusion prevention systems.

The company aggressively took market share in the massive $11.6 billion global
market for cybersecurity, more than doubling revenues in each of the three years
before its IPO.

On top of that, its CEO David DeWalt had outstanding credentials as former CEO
of industry leader McAfee.

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Canada Goose (GOOS)

IPO Date: March 2017

Deal Size: $253 million

Canada Goose Market Cap at IPO: $1.4 billion

+328% in Eighteen Months

First-Day Pop: 27%

Subsequent Gain (2-year): 328%

CEO at IPO: Dani Reiss

When $1,000 coats are flying off the shelves, there’s serious money being made.

Canada Goose has long been the luxury brand of choice for the extreme cold with
its ultra-warm down outerwear. Its exclusive and powerful branding has resulted
in 84% repeat customers.

It successfully executed multi-channel distribution through e-commerce and flag-

ship stores in New York and Toronto.

Adding to its rapid growth in winter outerwear, GOOS pitched investors on plans
to expand its product lines into knits, fleece, and footwear.

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What do the best IPOs have in common?

1 IPO MARKET

To get great post-IPO gains, it helps to have the market on your side. The stock
market was booming during the IPOs of AMZN (’97), ICE (’05), FEYE (’13), and
GOOS (’17). Only Google (’04) went public in a somewhat challenging market.

2 INDUSTRY

If a roaring stock market opens the door for returns, strong industry trading
throws gas on the fire. Internet stocks were all the rage when Amazon went
public. FireEye is another excellent example: The tech sector broadly trended
up, and cybersecurity was exceptionally hot.

3 UNDERWRITERS

This one’s easy to miss. Each of the five deals had experienced underwriters.
Not only do they have clients with long-term horizons, but underwriters also
put their reputation on the line with every deal they underwrite. Morgan Stan-
ley was the lead on three of the five, and Deutsche Bank was on another.
Canada Goose picked a less active lead underwriter, Canada-based CIBC, but
it had a strong supporting cast with Credit Suisse, Morgan Stanley, Goldman
and others.

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What do the best IPOs have in common?

4 FUNDAMENTALS

A business must demonstrate solid core fundamentals. The best IPOs had
impressive year-over-year revenue growth. Google was growing at over 200%.
FireEye at about 150%. Amazon’s one-year sales rose almost 3,000%. Google,
Intercontinental Exchange and Canada Goose all supplemented their fast
growth with a highly profitable business. That’s a powerful combination. In the
case of unprofitable Amazon and FireEye, investors were more than willing to
bet on the potential of their new technology. Notably, none of the winning
IPOs were over-leveraged. Investors rarely get 100% returns when a company
starts off its public life shackled by debt.

5 LEGAL DOCS

The only way to know an IPO in and out is by reading the IPO legal documents
(SEC Prospectus). Here is where the companies describe their lines of busi-
ness, recent results, risk factors, competitive landscape and strategy. The IPO
Prospectus is a must-read document for every successful IPO investor. In the
case of the top five, each executed on the strategy that management laid out
in the prospectus.

6 EARLY TRADING

All five companies had strong early trading after the IPO. Except for Google,
each priced above the range, signaling high demand for the deal early on (Goo-
gle thumbed its nose at Wall Street by doing a Dutch Auction, then had to
price below the range).

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How did these deals look on IPO Pro?

Amazon Google Intercontinental FireEye Canada

Exchange Goose

Market Direction

Underwriter Deutsche Morgan Morgan Morgan

CIBC
Bank Stanley Stanley Stanley

Consumer
Industry Technology Technology Financials Technology Discretionary

Core Fundamentals

Growth

Profitability

Leverage

Legal Docs Read it here Read it here Read it here Read it here Read it here

Early Trading

For every IPO in IPO Pro, these data points are evaluated and shown in a QuickTake box on
an IPO’s profile. This box is meant to give you a quick overview of a deal, to decide if it’s
worth it for you to spend your time analyzing the company.

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Bringing it all together

Don’t waste your time looking for the next IPO moonshot.

Instead, focus on increasing your hit rate and limiting your misses. You’ve seen some of
the best IPOs of all time, with returns theoretically obtainable by any investor. As our
study shows, getting an IPO allocation is not an essential condition to successfully profit
from an IPO. Dozens of new names pop up every year that significantly beat the market.

How do you find them?

There’s no magic formula. But we’ve shown that a number of fundamental and technical
indicators can point you in the right direction and improve your probabilities for success.
And IPO Pro puts those indicators front and center, saving you time and improving your
results. The step-by-step process for analyzing and selecting an IPO form a mnemonic
device, MUSCLE.

Every profile in IPO Pro is designed with the MUSCLE Method in mind.

In the top right corner, you will find the IPO Market Indicator (M), while underwriter infor-
mation (U), industry strength (S), core fundamentals (C) and legal docs (L) are all in the
quick take box. Early trading (E) will appear in the quick take box as soon as an IPO starts
trading and will appear on the top right of the profile.

IPO

Analysis & Selection

M U S C L E

IPO Market Strength of Industry Legal Docs

Underwriter Core Fundamentals Early Trading

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