Shares in GrubHub initially surged more than 50 per cent in their debut on the New York Stock Exchange, lifting the online food delivery site’s valuation above $3bn in a sign investor demand for profitable tech start-ups remains afire.
The Chicago-based company, whose Seamless and GrubHub websites connect restaurants with consumers, rose as much as 57 per cent in early trade before settling back to close just over 30 per cent higher, at $34.03. The offering had been priced at $26 on Thursday night, more than earlier projections. GrubHub sold 4m shares in the offering, while selling stockholders offered another 3.4m for sale.
Citigroup and Morgan Stanley acted as joint bookrunners for Friday’s offering. The flotation follows a busy first quarter for IPOs, with the average amount raised in the period reaching a record, according to data from Dealogic.
The rise stood in contrast with a difficult month for the tech sector stalwarts, including Facebook and Twitter, which have each fallen more than 10 per cent. King Digital, the maker of Candy Crush, continues to trade below its offering price.
Google A class shares, which carry minimal voting rights, ended the day down 4.59 per cent to $545.25, the second day of trading after a split to create a C class of stock which carries no voting rights.
Amazon fell 3.25 per cent to $322.78 and Netflix shares were down 4.9 per cent to $337.31, as momentum stocks on Nasdaq were hit hard.
A week long spotlight on the business of rapid fire stock trading also knocked down the valuations of the publicly traded companies at the heart of a debate over whether US stock markets are “rigged”.
Shares in US online brokers suffered some of the largest losses on Friday as ETrade fell 7.83 per cent to close at $20.43, TD Ameritrade lost 4 per cent to $30.71 and Charles Schwab declined 4.79 per cent to end at $26.06.
KCG, an algorithmic trading company that also executes orders on behalf of clients, lost 6.81 per cent to $10.47. Major US stock and derivatives exchange operators including Nasdaq OMX, CBOE and ICE also fell.
The scrutiny of the US trading industry was prompted by the release of Michael Lewis’ latest book, Flash Boys: A Wall Street Revolt.
Elsewhere, CarMax, the largest US used-car dealership chain, slid after the company reported fourth-quarter results shy of Wall Street forecasts.
The firm said sales rose 9 per cent to $3.08bn, led by a 7 per cent advance in same-store sales, compared to expectations for $3.18bn. Profits declined 7 per cent to $99m, or 44 cents per diluted share, nearly a dime below analyst forecasts.
CarMax said it would lift its share repurchase programme by $1bn. Shares dipped 4.21 per cent to $45.56.
Finish Line strengthened following a broker upgrade to ‘overweight’ from ‘equal-weight’ as analysts at Morgan Stanley called the company their “top small-cap idea”.
The shares rose by 1.13 per cent to $27.16 as Morgan Stanley analyst Jay Sole said the investment bank expects strong athletic footwear sales trends to continue through 2014, with Finish Line likely to benefit from exclusive Nike offerings.
“Finish Line’s last quarter showed the company can deliver even in a very poor mall traffic environment,” Mr Sole said. “A strong new product pipeline and the continuing health and wellness trend should sustain Finish Line’s premium running footwear business through 2014.”
Athletic footwear sales have like “troughed” as recent data points to an acceleration, Mr Sole added.
First Solar climbed as much as 6 per cent before paring its gains on Friday to just under 2 per cent, closing at $69.72, as analysts at Citi lifted their price target on the firm.
Analyst Shahriar Pourreza said the company’s outlook “remains robust”, raising his target on the firm to $87 from $63.
“The company has already contracted/booked 75 per cent of the earnings in 2015 and 40 per cent for 2016 so material upside remains as business mix changes and First Solar continues to diversify globally,” Mr Pourreza said.
Overall, US equity markets struggled for direction after the month’s non-farm payrolls report showed payrolls expanded by 192,000 in March. The figures were marginally below Wall Street forecasts.
The benchmark S&P 500 fell 1.25 per cent to end at 1,865.09 while the Dow Jones Industrial Average dipped 0.96 per cent to 16,412.71. The tech-heavy Nasdaq Composite declined 2.6 per cent to close at 4,127.73.