(Reuters) – Shares of Container Store Group Inc doubled in their U.S. market debut on Friday as investors encouraged by a recent run of impressive “first-day pops” piled into the stock.
The company is the seventh this year whose shares have doubled on the first day of trading, according to Jay Ritter, a finance professor at the University of Florida.
Shares of Qunar Cayman Islands Ltd, a Chinese travel website controlled by internet giant Baidu Inc, also more than doubled in their U.S. debut on Friday.
“It is reflective of the hot IPO market at this point of time,” said John Fitzgibbon, founder of Iposcoop.com, which tracks IPOs.
Container Store’s shares, which had been priced at $18, opened at $35 and touched a high of $36.55, valuing the company at about $1.7 billion. They were trading at $36.32 at 11.43 a.m. ET on the New York Stock Exchange.
The Coppell, Texas-based company raised $225 million after pricing 12.5 million shares at the top end of the expected range.
Container Store, established in Dallas in 1978, operates 62 stores in 22 states and the District of Columbia. Rivals include Wal-Mart Stores Inc, Bed Bath & Beyond Inc and privately owned Crate & Barrel.
Container Store has two reporting units — TCS, which includes retail stores, a website and a call center, and Elfa, a Swedish manufacturer of component-based shelving and drawer systems that it acquired in 1999.
“The housing market is a part of the reason that this stock is doing well,” Ritter said. “The company isn’t exposed to the downward trends in the housing market. When people don’t buy bigger or better houses they feel the need to make better use of their existing space, which benefits a company like this.”
Retail stocks have outperformed the broader market so far this year. The S&P Specialty Retail Index has risen 36 percent, compared with a 24 percent rise in the S&P 500 Index.
But Container Store has yet to post a profit, even though it achieved positive comparable-store sales growth in the 13 quarters through the end of August.
Container Store’s net loss narrowed to $130,000 in the year ending Aug. 25 from $30.7 million a year earlier. Net sales rose 11.5 percent to $706.7 million.
Lead underwriters for the offering were J.P. Morgan, Barclays, Credit Suisse, Morgan Stanley, Merrill Lynch Pierce Fenner & Smith, Wells Fargo and Jefferies.