While every sport has its heart-stopping moments, one of the most dramatic events of any athletic discipline is the buzzer beater in basketball. A typically intense competition featuring back-and-forth offensive plays, a game — and the final result of a championship — can come down to the capricious principles which Sir Isaac Newton first put to print many centuries ago.
What makes the buzzer beater so acute in its raw emotions is that the game itself doesn’t necessarily stop when the clock ticks zero. Rather, if a player launches a ball just prior to the final buzz, everyone becomes a physicist — or at least an observer of Newtonian mechanics — until the ball either hits the floor or drops into the basket.
With the initial public offering (IPO) of Vacasa, Inc., a vacation rental management platform, investors are exactly that: observers of scientific principles on which hinge the success (or failure) of the market debut. But in this case, the issue is not so much about gravity and velocity but rather epidemiology.
As the international community comes to grips with the omicron variant of the SARS-CoV-2 virus, prospective investors of the Vacasa IPO should monitor the latest headlines carefully before proceeding.
When Is the Vacasa IPO Date?
Following a blitzkrieg of public market debuts this year, it’s not surprising that Vacasa is entering the fray to put a high note to 2021. According to a Bloomberg report in November, “about 2,850 businesses and special purpose acquisition companies have raised more than $600 billion in IPOs, leaving the records for both deal count and proceeds reached in 2007 in the dust.”
The vacation rental management specialist will ink its debut on the IPO calendar on Dec. 7. Vacasa shares will trade on the Nasdaq under the ticker symbol VCSA. On a side note, The Wall Street Journal noted that the tech-centric exchange is “poised to beat the New York Stock Exchange in initial public offerings this year, far outpacing its crosstown rival during a record year for capital raised in U.S. public markets.”
Aligning with the biggest trends in the market during the post-pandemic period, Vacasa will join other publicly traded firms through a reverse merger with a special purpose acquisition company (SPAC). Unlike the traditional route to access the capital market, a SPAC is essentially an empty vessel. Its purpose is to launch its own IPO and search for a viable business enterprise, usually within a 2-year time frame. This circumstance explains why journalists refer to SPACs as blank-check firms or shell companies.
Regarding Vacasa, it will merge with TPG Pace Solutions Corp. (NYSE: TPGS), a SPAC benefitting from a management team with a track record of successfully listing multiple blank-check firms to major exchanges. The executives behind TPG Pace have also successfully completed 3 transactions prior to the Vacasa merger announcement.
In that sense, prospective buyers of VCSA stock have confidence that the SPAC sponsors have done their homework. However, merely conducting due diligence does not wholly eliminate risk associated with unfavorable capital valuations. That’s a nice way of saying that you can easily lose your entire principal with IPOs no matter how they enter the public arena.
Moreover, the timing of Vacasa’s debut imposes great difficulties on interested retail investors. To be 100% clear, factors outside of Vacasa’s control may represent the biggest influence on VCSA’s trajectory. Thus, you may be rendered a nail-biting sports fan, watching the ball agonizingly hanging in the balance.
Also a factor to keep in mind is that while initial reports about the severity of the new strain are encouraging, it may not be the science that determines where VSCA stock lands but rather the perception of the science. In investing, the right thesis can sometimes lead to the wrong outcome.
Vacasa Financial History
Back in April of this year, TPG Pace Solutions announced the completion of its IPO, which featured the distribution of 25 million Class A ordinary shares, along with an additional issuance of 3.5 million shares per a partial exercising of the underwriters’ over-allotment option. The price per share was $10 (typical of a SPAC IPO), resulting in gross proceeds of $285 million before deducting expenses associated with the raise.
At the time of its debut, TPG disclosed only that it was seeking an enterprise “in any industry that is well positioned to thrive in the public markets.” The vagaries associated with SPACs is another risk factor that prospective investors of pre-merger-announcement shell companies should consider. Still, that didn’t stop Deutsche Bank (NYSE: DB), JPMorgan Chase & Co. (NYSE: JPM) and Goldman Sachs (NYSE: GS) agreeing to serve as joint bookrunners for the deal.
Moving away from the public offering toward Vacasa’s company-specific fundamentals, VSCA stock is an incredibly challenging proposition due to the omicron threat. For instance, a less severe but highly transmissible variant should not necessarily represent a cause for relief, let alone celebration.
Government statistics indicate that 54.1 million Americans are over the age of 65, putting these folks into a higher-risk category. As well, countless millions could have personal medical profiles that put them at greater danger, irrespective of their age. Therefore, jurisdictional authorities both in the U.S. and abroad could impose restrictive measures in the interest of public safety. And those measures may not align well with the underlying core business of VCSA stock.
That said, many investors will undoubtedly find Vacasa’s growth metrics very attractive. In the 9 months ending Sept. 30, 2021, the company generated revenue of nearly $697 million, per its quarterly disclosure with the U.S. Securities and Exchange Commission (SEC). This figure compares very favorably to the $382.9 million posted in the year-ago period (an 82% lift).
Such robust growth confirms the real phenomenon that is retail revenge, or the idea that consumers are ready to open their wallets to make up for a lost year in 2020. As well, sales figures point to a higher emphasis on social gatherings, which is a direct positive catalyst for VCSA stock.
Investors must be aware that in the first 3 quarters of 2021, Vacasa suffered a net loss of $36.4 million. However, this crimson-inked tally pares the loss of $47 million in the year-ago period. Also, in the third quarter, Vacasa posted positive net income of $32.8 million.
No matter how you slice it, VCSA stock is a ball-in-the-air trajectory play. If you trust your calculations regarding epidemiological windage to fall toward a positive spectrum, you may very well profit handsomely from the vacation rental management opportunity. On the other hand, epidemiology is not the only variable in your crosshairs. Indeed, a gust of unanticipated broad market sentiment can send your shot way off course.
Since every investor operates with a unique risk-reward profile, it’s impossible to present a one-size-fits-all plan for VCSA or any other IPO. However, for those leaning on the conservative end of the profile, you may be better served exercising patience. Remember, decisions under duress can sometimes lead to poor outcomes.
What should give any investor pause is how VCSA stock — under the SPAC’s ticker symbol TPGS — has performed recently just prior to the completion of the business combination. At the conclusion of the Dec. 3 session, TPGS closed at $9.74, almost 3% below its initial offering price.
Again, investors have another reminder about market volatility. Being first doesn’t always translate to being profitable.
How to Buy Vacasa IPO (VCSA) Stock
With Vacasa scheduled to enter the public arena shortly, investors must acquire shares at the open, which is easy to do if you know how to buy stocks. If not, just follow the steps below.
Step 1: Pick a brokerage.
Any reputable brokerage will allow you to buy VCSA stock. Therefore, take the time to consider which of the best brokers truly meets your needs.
Step 2: Decide how many shares you want.
IPOs of any nature are incredibly risky. Therefore, mitigate some of the danger by electing a balanced share count.
Step 3: Choose your order type.
Before trading, learn these market concepts.
- Bid: The buyer’s best offer for a stock.
- Ask: The seller’s lowest acceptable price.
- Spread: The difference between the bid-ask price, the spread indicates market risk as this is also the profit margin for market makers.
- Limit order: Buy or sell requests at a predetermined price, limit orders provide transparency but no execution guarantees.
- Market order: Market orders guarantee fulfillment but only at the current rate.
- Stop-loss order: Stop-loss orders automatically exit your position at either a predetermined price or anything lower.
- Stop-limit order: Stop-limit orders only leave positions at a specified price, but they also carry non-fulfillment risks.
Step 4: Execute your trade.
Follow these steps to execute a market order:
- Select your action type (buy or sell).
- Enter the shares you want to acquire (or sell).
- Hit the Buy (or Sell) button.
Follow the same sequence for limit orders (but include your execution price).
VCSA Restrictions for Retail Investors
Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons before participating in an IPO. Don’t engage if you have privileged information.
While you can’t buy pre-IPO shares of Vacasa, prospective IPO buyers may consider SoFi Invest, which allows pre-IPO share distribution for select opportunities.
Vacation or Staycation?
With Americans eager to venture outside, Vacasa’s IPO caters perfectly to the needs of both traveling tenants and landlords. However, the omicron threat arrived at the most inopportune time, presenting serious questions about the viability of VCSA stock.