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ETFs in Focus on Stunning BigCommerce IPO

E-commerce software provider BigCommerce Holdings Inc. BIGC made a stunning debut on Nasdaq on Aug 5 as its shares soared by triple digits during the first day of trading. This represents the second-biggest gain this year on a U.S. exchange at the opening bell for a newly public company that has raised at least $100 million, according to data compiled by Bloomberg.

Trading had halted two times during the day — one when the price skyrocketed to $79.40 within three minutes of opening and another when prices surged to $91.80 (read: IPO ETFs Breeze Past S&P 500 in 1H: What Next?).

The IPO pushed BigCommerce’s market capitalization to more than $5.4 billion. The company has raised nearly $216 million through the IPO offering of 9 million shares at $24 higher than the anticipated range of $21-$23. The company had increased the price range from $18-$20 per share on huge investor demand.

BigCommerce: A Good Bet?

BigCommerce is a leading software-as-a-service (SaaS) ecommerce platform that empowers merchants of all sizes to build, innovate and grow their businesses online. In its IPO filing, the company said that its platform “simplifies the creation of beautiful, engaging online stores by delivering a unique combination of ease-of-use, enterprise functionality, and flexibility.”

The software company manages some 60,000 online stores across industries worldwide. It reported revenues of $33.2 million and a net loss of $5.8 million in the three months ended Mar 31. BigCommerce competes strongly with Shopify (SHOP), which has rallied more than 170% so far this year.

As e-commerce has been growing exponentially due to the COVID-19 pandemic, investors are jumping into the space to cash in on the opportunity with the newly minted company (read: 5 ETF Areas Hitting Highs on Resurging Coronavirus Cases).

ETFs in Focus

The successful market debut of BigCommerce could pave its entry into a number of ETFs in the coming days. We have highlighted these below.  

Renaissance IPO ETF IPO

This fund provides exposure to the largest and most-liquid, newly listed companies by tracking the Renaissance IPO Index. New companies seek inclusion on a fast-entry basis on the fifth day of trading. The fund currently holds 42 stocks in its basket, with each accounting for less than 10% exposure. Technology is the top sector accounting for 42.9% share while healthcare and consumer discretionary round off the next two spots with double-digit allocations each. The fund has amassed $99.8 million in its asset base while it trades in a light volume of about 89,000 shares, probably implying additional cost beyond the expense ratio of 0.60%. The product has surged 49.7% so far this year.

First Trust US Equity Opportunities ETF FPX

This ETF focuses on the largest, best-performing and most-liquid U.S. IPOs, and follows the IPOX-100 U.S. Index. New companies can find entry into the fund’s holding after trading for a minimum of 100 days. In total, the fund holds 101 securities in its basket with none accounting for more than 6.4% share. The fund has accumulated $1.4 billion in AUM and witnesses volume of about 72,000 shares per day. It charges 58 bps in fees a year and has gained 15.5% this year (read: Take a Bite of Uber-Postmates Deal With These ETFs).

Global X E-commerce ETF EBIZ

This fund invests in companies positioned to benefit from increased adoption of e-commerce as a distribution model, including companies whose principal business is in operating e-commerce platforms, providing related software and services or selling goods and services online. It holds 41 stocks in its basket and has accumulated $67.2 million in its asset base. The ETF charges 50 bps in annual fees and sees average daily volume of 61,000 shares. It is up 52.2% this year (read: 6 ETF Trades to Forget Worst-Ever Q2 GDP Contraction).

SPDR S&P Internet ETF XWEB

This product targets the Internet segment of the broader technology. It follows the S&P Internet Select Industry Index, holding 43 stocks in its basket. The ETF charges 35 bps in annual fees and trades in a volume of 7,000 shares. With AUM of $29.9 million, the fund has gained 52.7% this year and carries a Zacks ETF Rank #2 (Buy).

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First Trust US Equity Opportunities ETF (FPX): ETF Research Reports
 
SPDR SP Internet ETF (XWEB): ETF Research Reports
 
Renaissance IPO ETF (IPO): ETF Research Reports
 
Global X Ecommerce ETF (EBIZ): ETF Research Reports
 
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