Employees and community stakeholders at the Venture Global Plaquemines liquefied natural gas export facility in Port Sulphur, Louisiana.Photographer: Kathleen Flynn/Bloomberg
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The list of companies that have flopped out of the gate when entering public markets has a new king: Venture Global Inc.
Shares of the liquefied natural gas exporter have cratered more than 60% since going public, erasing $39 billion in paper value and burning investors who bought the stock in its initial public offering. Even before the ill-fated listing, the valuation target had already been reduced $65 billion.
The stock’s implosion took a turn for the worse after the crucial first earnings missed expectations last week, as Venture Global talked down the year ahead less than seven weeks after being on the road to pitch itself to would-be buyers.
“Almost always, at the time of the IPO the company guides analysts to forecast earnings for the first quarter that the company will be able to beat,” said Jay Ritter, professor of finance at the University of Florida.
Source: Bloomberg
Note: NOTE: Venture Global performance through March 7 close
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The company’s IPO is on track to set a record for the worst post-debut two-month share price performance by a company raising more than $1 billion on a US exchange, data compiled by Bloomberg show. The shares are down 64% from the IPO price, which would be a much larger plunge than its closest rival for the unwanted title, SmileDirectClub Inc., whose shares dropped nearly 50% over the two-month period following its 2019 debut.
Venture Global has already cemented its place as the poorest performer in its first month among energy-sector IPOs raising over $1 billion, registering a 39% drop over that period, data compiled by Bloomberg show.
The fallout has resulted in “one of the quickest valuation resets ever,” said Ritter, “where ‘reset’ only gets used with downside moves.”
Venture Global has built one of the fastest growing energy companies in the world that is focused on continued long-term growth, a company spokesperson said in response to a query from Bloomberg News.
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Venture Global’s spiral served as a black mark on what’s been a touch-and-go IPO market as eight of the 10 largest first-time share sales this year are trading below their initial prices. Now with the snapping of a rally for the S&P 500 — and most notably the seven largest companies — that once seemed endless, the outlook for Venture Global’s shares has only worsened.
Still, the pool of stock that can be actively traded in Venture Global is modest, with about 3% of the total shares available for trading, according to regulatory filings. That means the bulk of the paper losses — namely for its founders, Mike Sabel and Bob Pender — are on shares that remain unavailable for trading, and selling them into the market when lockups expire could entice potential investors over the longer term.
— With assistance from Ruth Liao
(Updates with further share price decline throughout.)
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