Resideo IPOs, Then Plunges

Author: Dan Gelinas, Published on Oct 31, 2018

ADI and Honeywell Homes management have been touting their spinout and IPO for months, including appearing on Wall Street as they widely shared on social media:

And:

However, the stock is down 29% from the start of when-issued trading, as shown below:

[Update: it fell again on day 3, falling as far as $19.40 but finishing the day down just another 3.79% at $21.08.

What is happening? What is the outlook for the newly independent company?

In this note we look at:

  • Strong Optimism from Resideo
  • Resideo's IPO
  • Steady Decline Over First Two Days
  • Valuation
  • Bull and Bear Case from Financial Experts

*** *** ********* ***** ********** **** **** ******* ***** ******* and *** *** ******, ********* ********* ** **** ****** ** they ************ ** ****** *****:

***:

*******, *** ***** ** **** **% **** *** ***** ** when-issued *******, ** ***** *****:

[******: ** **** ***** ** *** *, ******* ** *** as $**.** *** ********* *** *** **** **** ******* *.**% at $**.**.

**** ** *********? **** ** *** ******* *** *** ***** independent *******?

** **** **** ** **** **:

  • ****** ******** **** *******
  • *******'* ***
  • ****** ******* **** ***** *** ****
  • *********
  • **** *** **** **** **** ********* *******

[***************]

Strong ******** **** *******

*** ******* ******* *** ********* ** ******* **** *** **** the ********* ****, *** ******* ******** *** *** ************ ******** ********** **** ** *** **** **** ** ******* 10, ****, **** ***** *** *** ***** ********** ********** **** *** company ***** ******, **** *** *** ****** ***** *** ************:

***** ***, **'** ******* ** *** *** **** ******** ****. That's ********* ****** *. ***** ***, **'* ***** ******* *** of *** ***** *** ***** ******. **** ** *** * start ** ******* ****'* ****** ** ****** *** *** ** get *** ******** **** ** ***********. ** **** * ****** balance ***** *** **** **** ****. ** **** **** **** top *** ****** *****. *’* ********* **** *** **** **’** put ********. **’** ****-********** ** ***** *********** ****** **** *** future.

** *** ******** ****, ******* ****** ******* ** ******* ***** ringing *** ******* **** ** *** *** **** ***** ******** on ******* ****, ********** **** *** ***:

Resideo's ***

*** ***** ***** "****-****** *******" ** ******* ** ** $** *** ** **** *** the **** * ***** ** **** ********** **** ******* ******* at ~$**, * **** ** ***** **%:

Steady ******* **** ***** *** ****

*******'* ***** *** * ****** ******* **** *** ***** *** days ** ******* *** ******** ********* ***** $**:

*********

*** *******'* ****** ********* ** *** ~$*.* ******* *** (*** million ****** * ~$** *** *****) ******** ** ******* ** ~$4.5 *******. ** ** *** ******** ** *****.

***** **** ************ / **** *********** ******* ***** ********* *** even **** ****, ** ** *** ***.

************ **** ** *** ************* ***** ********** ******** ** ***** sales ***** ***** ********** ******** ***** ****** ******** ** ***** than *************. *** *******, ******* **** ****** ~$ * ******* in ******* *** **** *** * ****** ****** ************** ** ~$2 *******. ** * ******* *****, *** *** **** ** Resideo's ******** ***** ***** ** ~$*** *******.

*** ********* **** **** ** *** ******** ** ************* **** profitable **** *** *** ****, **** ****** ***** *** ******** less *******. *************, **** **** ****** ****** ***** **** ********* Homes **** ** ***** ** ** ******* ** ******.

********, **** ***** ************** *** ******* ** * $*.* ******* valuation.

Analyst *****

** ******* ** ************.****** **** *********** ****** ** *** ***** *** ******* ****** *** ** ********* ** ** ***, ******** **** *** drop *** ** ********** *** *******. *****, **** ***** ********* are ***** ******** ** ****:

****-**** *** *********** ** ********* (*** **** **** ** ** IPO) *** ** ***** ** **** ****** ********* ********* *** new *******. *********, ** ** *** ******** ***** *** ***** and ** ** ** *** ******** ** ************* *********. *******, the ****-*** ** ******* **** ******* **** *** ****** *******, and **********, ************* ********* *** ********** **** ****** ****** ** the ****-***. *** ** *******. ** * ***** *** ****** fund ******* **** * ***** *** ******* ***** *********** * small *** ****-***, **** ****** **** *******’* ********** ******* ******** the ******* **** ******* *** ****-***. *** ***** *******, **** investors **** ***** ****** ** *** ****-*** ********** ** ***** or ********** *****.

******, **** ********** ******* * *** ******** ***** *****:

*** ********** **** ** *** *** ****-*** *** **** ****** incentive ** ******* *** ******* *********. ** ****, *** ********** team ** ************ ** *** ******* *** *****. ***? ******* management ***** ******* *** ******* ****** ***** ** *** ***** couple ***** ** *******. *** ***** *** ***** ****** *********, the ******* ***** ********* *** ******* ****.

********

******,* **-**** ********************* & **.***** *** **** **** *** ***** ***** **** **** **** 12-18 ****** ** $** (** ** ********* ********* ** $*.* billion):

*** ****** ******** *** ********, ******** **** * ***** ****** higher ****** ******** *** *** **** *** *** ***:

**** ****** ****** *** **********, *** * ******** *** ***** toward ******-****** ******** ******** *** ********* ********, ** ***** **** is ** *********** ********** ***********. *** ** ** **** *** from ****** *********, ******* ** ******* ** *** ************ ******* and ****** ******* ****** ****** ** ********, ******* & **** and ************. *** ***** *** *** **** ****** *** ********* from *** ***** ****** “*********” *******, *** ******** ***** ***** conservative. *** ****-*** ** *** *** ******* **. ** ******** coverage **** ** ********** *** $** ***** ******.

Bear ****

*************.*** ******* ******** **** ****, *********** **** ******* *** ** *** ********* up ** $*** ******* ******** *** *** **** ** *****:

******* **** **** ******** ** ********* ***** ******** *************** *** reimbursement ********** **** ******* ****** *********'* ******* ****** ********* ********, including *** ****** ******** ********* **** ****** **** *** ********** of *** ****** ************** ******* ********... ***** **** ***** ** no ***** ********* ****** *** *** **** **** *** ******* is ** *** **** *** *** **** ** *****, ***** that ***** ** ******* ********** ********* *** ********* ****** **** outlay, ****** ** **** **** ********* ** ********* ** ***** intrinsic *****. ***** *** ******* ********* **** *** ******* *** pay ** *** ***** **** ** $*** *******, ** ** unclear ** **** *** ********* ** ***** ******** **** **.

**** ******** **** ***** $*.* ******* **** *** **** **** consumer ******** ***** **** ** * *********:

********, ***** **** *** ******* ******* **** ** **** ***** with * ******* ****** ** **** *** *** ***** *** $1.2 ******* ******* ** ***** ** **** *** ********* *****, it ***** **** **** ******* ******** ** *********. ** * prospective ********, *** ****** **** ******* ************ ***** **** ****** obligations ** **** $*** ******* **** *** ****** *********** *** interest ******** ******** ***** ** ******* **** *** ******* ***** come ** **** ******* ******* ** ***** ** **** * sharp ******** ********. **** **** ******* ************ ********* **** *** analyze **** *** ******** ******** **** *** ******* ****** **** is ******* *************.

Challenges ** ***** ******

***** ****** ***** ** ******* **** *** *** ****** *** companies, ********* ** **** ******* **** ********:

***** ******* ** * ***** **** ** * ******** ****** company (** ******* ********** ***) *** *** ********* ** ******** information ***** * *******’* *********** *** ********. **** ****** *** going ****, ********* *** ***** *** **** ***, *** **** side ** **** **** ** ***, ******** *** **** ***. Avigilon, *.*., ***** ******* **** ***** ** ****. ******* ** very ******* ****** *** **** *** *** ** ****.

******,*********'* *** **** ******* * ****** **** ****** ***** ******** ** ***** **** going ******, ******:

[*****] ******, *** ********** ***** ** ****** ************, *** **’* constantly ** ***** ******** ** ***********. ** ** ******* ******, it ****’* ********* * *** ******* ******* **.

******* ** *** ******* ** ******* ******* ** ****, **** are ****. *** *** **** **** ** **** **** **** low ***** *****, **** ** **** *** ********* ** ****.

Poll / ****

Comments (15)

John Honovich

IPVM | 10/31/18 10:06am

***, **** ****.

***, ***, **'* **** ***** *****, *** ***** $**:

Undisclosed #1

In reply to John Honovich | 10/31/18 02:57pm

$**, ** * *** * ***** ** ***********, ** * share ** *******? ***** ****. *'** ******** **** *** * few ***** ***** **** ** *****, ****** ** ***** * better ***, ********* ** **** *** **** **** *** ** the ***** **** **** ****.

Avatar

Dan Gelinas

IPVM | In reply to John Honovich | 10/31/18 11:39am

****** ****. * ****. **'* **** ** * *****. ** will ** *********** ** *** ** **** *** ******** ****************** ******** *********** ** *** ************ *****.

John Honovich

IPVM | 10/31/18 10:11am

***** *** *** *** ***** *** ***** ** *** ** their ***** *****...

Avatar

John Bazyk

IPVMU Certified | In reply to John Honovich | 10/31/18 02:49pm

**** ******* ***. ****’* *** *** ***** ***** ***** ****. 😂😂

Avatar

Ross Vander Klok

IPVMU Certified | In reply to John Honovich | 10/31/18 02:00pm

**** ** **** *****!!! *****, *** *****.

Undisclosed #2

10/31/18 02:18pm

*******'* ******** **** * **** **** ** ***** **** ** Connected ****. ** **** ********* ***** *** **** *******, ********** is ******** ****** ***********. *** ** ************* ** *** ********** space **** ***** ****? *** **** ** *** ******** ****, the *************' ** ********** ******* *** *** ** ****** *** "love" *** ** ***. *** *** ****'* **** *** ** miss **** **** **** **** ******* ** ** * ****. ADI **** ******** ***** ** ****** ** * ********** ** other *************' ** *******, ********, ***. ***'* ********* *** ** other ************? * **** ***** ********** ** ** ****** ** ADI. * **** ********* ***'* *** **** *********** *** **** has ** ** ********* ** **** *****. ** ** *** growing ** ***** ***** **** ** ***** ** *** **** sales ** *****, ******, ***. ** ***** *** * ******** Confidence ***** ** *************' ********** ***** *** ***, **** ***** it **** ****?

Undisclosed Manufacturer #3

11/01/18 09:52am

* ******* **** ************* ** *** ******** ******, ** **** is **** ***** *** *** "**** ** *****" ****. ******* will **** *** *** ** *****-********** ********* *** * **** time.

* *** *** **** **** ********** ** ******* ****** *****, with ****** ********, ******** *********, *** *** ******* ** **** to * ******* ****** ** *****-**** ******* ** * ****, completely ****** ***** ***** ** *** *********** ****.

**********: *** ****** **** ** **** *** ** * ****.

Undisclosed Integrator #4

11/01/18 08:06am

*** **** *** **** ** * ********. ***** *** **'* ADI *** *********. *** **** ******* * ***** *** ** worse **** ***** *** ** *******.

Avatar

Dan Gelinas

IPVM | 11/01/18 07:16pm

**** ****** ** ******** ** *** ***** ***** ** **** as **** ** ********:

** ******* ** ************.****** **** *********** ****** ** *** ***** *** ******* ****** *** ** ********* ** ** ***, ******** **** *** drop *** ** ********** *** *******. *****, **** ***** ********* are ***** ******** ** ****:

****-**** *** *********** ** ********* (*** **** **** ** ** IPO) *** ** ***** ** **** ****** ********* ********* *** new *******. *********, ** ** *** ******** ***** *** ***** and ** ** ** *** ******** ** ************* *********. *******, the ****-*** ** ******* **** ******* **** *** ****** *******, and **********, ************* ********* *** ********** **** ****** ****** ** the ****-***. *** ** *******. ** * ***** *** ****** fund ******* **** * ***** *** ******* ***** *********** * small *** ****-***, **** ****** **** *******’* ********** ******* ******** the ******* **** ******* *** ****-***. *** ***** *******, **** investors **** ***** ****** ** *** ****-*** ********** ** ***** or ********** *****.

******, **** ********** ******* * *** ******** ***** *****:

*** ********** **** ** *** *** ****-*** *** **** ****** incentive ** ******* *** ******* *********. ** ****, *** ********** team ** ************ ** *** ******* *** *****. ***? ******* management ***** ******* *** ******* ****** ***** ** *** ***** couple ***** ** *******. *** ***** *** ***** ****** *********, the ******* ***** ********* *** ******* ****.

John Honovich

IPVM | 11/30/18 08:15am

******* ***** ***** ****, * ***** *****, *** ******* * bump ** *** ***** **** ** ********, ***** ** ***** $21:

John Honovich

IPVM | 12/12/18 09:15am

******* **** *% ******* *** ***** *** ********* *****, ***** for ******* ****** ******* ** $** *******, *** *** *****, CFO, ** ******** ******* ******** **********.

Undisclosed #1

In reply to John Honovich | 12/12/18 02:53pm

******* ** ***** $***??? ($*** ** *% ** $***).

Avatar

Dan Gelinas

IPVM | In reply to Undisclosed #1 | 12/12/18 03:05pm

*** *********** #*, **** ********* ** **** ** ********** ** our ********* ** *** ******** *****:

*********

*** *******'* ****** ********* ** *** ~$*.* ******* *** (*** million ****** * ~$** *** *****) ******** ** ******* ** ~$4.5 *******. ** ** *** ******** ** *****.

***** **** ************ / **** *********** ******* ***** ********* *** even **** ****, ** ** *** ***.

************ **** ** *** ************* ***** ********** ******** ** ***** sales ***** ***** ********** ******** ***** ****** ******** ** ***** than *************. *** *******, ******* **** ****** ~$ * ******* in ******* *** **** *** * ****** ****** ************** ** ~$2 *******. ** * ******* *****, *** *** **** ** Resideo's ******** ***** ***** ** ~$*** *******.

*** ********* **** **** ** *** ******** ** ************* **** profitable **** *** *** ****, **** ****** ***** *** ******** less *******. *************, **** **** ****** ****** ***** **** ********* Homes **** ** ***** ** ** ******* ** ******.

********, **** ***** ************** *** ******* ** * $*.* ******* valuation.

Undisclosed #1

In reply to Dan Gelinas | 12/12/18 09:16am

*****, *** ****'** ****** *** *% ** *******, *** *********. I *** ******** *** ********* *** * ****** *** ** future-looking ****/***** ** **, *** **** **** ****'** ********* ****** at **. ***** * *******'* ** *** *********, *** ****** considered.

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