Resideo IPOs, Then Plunges
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
Strong ******** **** *******
*** ******* ******* *** ********* ** October **** *** **** *** ********* year, *** ******* ******** *** *** first******* ******** ********** **** ** *** York **** ** ******* **, ****, **** ***** *** *** ***** expressing ********** **** *** ******* ***** launch, **** *** *** ****** ***** for ************:
***** ***, **'** ******* ** *** the **** ******** ****. ****'* ********* number *. ***** ***, **'* ***** getting *** ** *** ***** *** being ******. **** ** *** * start ** ******* ****'* ****** ** figure *** *** ** *** *** products **** ** ***********. ** **** a ****** ******* ***** *** **** cash ****. ** **** **** **** top *** ****** *****. *’* ********* with *** **** **’** *** ********. We’re ****-********** ** ***** *********** ****** into *** ******.
** *** ******** ****, ******* ****** footage ** ******* ***** ******* *** opening **** ** *** *** **** Stock ******** ** ******* ****, ********** with *** ***:
Resideo's ***
*** ***** ***** "****-****** *******" ** ******* ** ** $** and ** **** *** *** **** 2 ***** ** **** ********** **** regular ******* ** ~$**, * **** of ***** **%:
Steady ******* **** ***** *** ****
*******'* ***** *** * ****** ******* over *** ***** *** **** ** trading *** ******** ********* ***** $**:
*********
*** *******'* ****** ********* ** *** ~$2.7 ******* *** (*** ******* ****** x ~$** *** *****) ******** ** revenue ** ~$*.* *******. ** ** low ******** ** *****.
***** **** ************ / **** *********** ******* their ********* *** **** **** ****, it ** *** ***.
************ **** ** *** ************* ***** valuations ******** ** ***** ***** ***** those businesses ******** ***** ****** ******** ** sales **** *************. *** *******, ******* does ****** ~$ * ******* ** revenue *** **** *** * ****** market ************** ** ~$* *******. ** a ******* *****, *** *** **** of *******'* ******** ***** ***** ** ~$*** million.
*** ********* **** **** ** *** business ** ************* **** ********** **** the *** ****, **** ****** ***** has ******** **** *******. *************, **** with ****** ****** ***** **** ********* Homes **** ** ***** ** ** revenue ** ******.
********, **** ***** ************** *** ******* at * $*.* ******* *********.
Analyst *****
** ******* ** ************.*** *** **** interesting ****** ** *** ***** *** Resideo *** [**** ** ****** *********] and *** ** ********* ** ** did, claiming **** *** **** *** ** attributed *** *******. *****, **** ***** investors *** ***** ******** ** ****:
****-**** *** *********** ** ********* (*** sold **** ** ** ***) *** so ***** ** **** ****** ********* regarding *** *** *******. *********, ** or *** ******** ***** *** ***** and ** ** ** *** ******** to ************* *********. *******, *** ****-*** is ******* **** ******* **** *** parent *******, *** **********, ************* ********* are prohibited from ****** ****** ** *** ****-***. Let ** *******. ** * ***** cap ****** **** ******* **** * large *** ******* ***** *********** * small *** ****-***, **** ****** **** manager’s ********** ******* ******** *** ******* from ******* *** ****-***. *** ***** reasons, **** ********* **** ***** ****** in *** ****-*** ********** ** ***** or ********** *****.
*** ********** **** ** *** *** spin-off *** **** ****** ********* ** promote *** ******* *********. ** ****, the ********** **** ** ************ ** *** ******* the *****. ***? ******* ********** ***** options *** ******* ****** ***** ** the ***** ****** ***** ** *******. The ***** *** ***** ****** *********, the ******* ***** ********* *** ******* have.
********
******,* **-**** ********************* & **. ***** *** **** **** *** ***** ***** will **** **** **-** ****** ** $** (or ** ********* ********* ** $*.* billion):
*** ****** ******** *** ********, ******** that * ***** ****** ****** ****** products *** *** **** *** *** day:
**** ****** ****** *** **********, *** a ******** *** ***** ****** ******-****** Products ******** *** ********* ********, ** think **** ** ** *********** ********** opportunity. *** ** ** **** *** from ****** *********, ******* ** ******* on *** ************ ******* *** ****** leading ****** ****** ** ********, ******* & **** *** ************. *** ***** MSD *** **** ****** *** ********* from *** ***** ****** “*********” *******, and ******** ***** ***** ************. *** spin-off ** *** *** ******* **. We ******** ******** **** ** ********** and $** ***** ******.
Bear ****
*************.*** ******* ***** *** **** ****, *********** **** ******* has ** *** ********* ** ** $140 ******* ******** *** *** **** 25 *****:
******* **** **** ******** ** ********* under ******** *************** *** ************* ********** that ******* ****** *********'* ******* ****** liability ********, ********* *** ****** ******** liability **** ****** **** *** ********** of *** ****** ************** ******* ********... Given **** ***** ** ** ***** liability ****** *** *** **** **** the ******* ** ** *** **** for *** **** ** *****, ***** that ***** ** ******* ********** ********* the ********* ****** **** ******, ****** it **** **** ********* ** ********* an ***** ********* *****. ***** *** maximum ********* **** *** ******* *** pay ** *** ***** **** ** $140 *******, ** ** ******* ** what *** ********* ** ***** ******** will **.
**** ******** **** ***** $*.* ******* debt *** **** **** ******** ******** could **** ** * *********:
********, ***** **** *** ******* ******* like ** **** ***** **** * limited ****** ** **** *** *** taken *** $*.* ******* ******* ** loans ** **** *** ********* *****, it ***** **** **** ******* ******** is *********. ** * *********** ********, the ****** **** ******* ************ ***** face ****** *********** ** **** $*** million **** *** ****** *********** *** interest ******** ******** ***** ** ******* that *** ******* ***** **** ** face ******* ******* ** ***** ** ever * ***** ******** ********. **** risk ******* ************ ********* **** *** analyze **** *** ******** ******** **** the ******* ****** **** ** ******* discretionary.
Challenges ** ***** ******
***** ****** ***** ** ******* **** and *** ****** *** *********, ********* to **** ******* **** ********:
***** ******* ** * ***** **** of * ******** ****** ******* (** Resideo ********** ***) *** *** ********* of ******** *********** ***** * *******’* performance *** ********. **** ****** *** going ****, ********* *** ***** *** brag ***, *** **** **** ** when **** ** ***, ******** *** find ***. ********, *.*., ***** ******* both ***** ** ****. ******* ** very ******* ****** *** **** *** bad ** ****.
******,*********'* *** **** ******* * ****** **** ****** ***** acquired ** ***** **** ***** ******, noting:
[*****] ******, *** ********** ***** ** raised ************, *** **’* ********** ** under ******** ** ***********. ** ** totally ******, ** ****’* ********* * was ******* ******* **.
******* ** *** ******* ** ******* forward ** ****, **** *** ****. And *** **** **** ** **** with **** *** ***** *****, **** do **** *** ********* ** ****.
Poll / ****
$**, ** * *** * ***** of ***********, ** * ***** ** Resideo? ***** ****. *'** ******** **** get * *** ***** ***** **** my *****, ****** ** ***** * better ***, ********* ** **** *** free **** *** ** *** ***** Meal **** ****.
****** ****. * ****. **'* **** on * *****. ** **** ** interesting ** *** ** **** *** overcome ********** ******** ******** *********** ** *** ************ story.
***** *** *** *** ***** *** stock ** *** ** ***** ***** sales...
*******'* ******** **** * **** **** is ***** **** ** ********* ****. As **** ********* ***** *** **** Resideo, ********** ** ******** ****** ***********. How ** ************* ** *** ********** space **** ***** ****? *** **** to *** ******** ****, *** *************' of ********** ******* *** *** ** seeing *** "****" *** ** ***. The *** ****'* **** *** ** miss **** **** **** **** ******* to ** * ****. *** **** WhiteBox ***** ** ****** ** * competitor ** ***** *************' ** *******, monitors, ***. ***'* ********* *** ** other ************? * **** ***** ********** is ** ****** ** ***. * know ********* ***'* *** **** *********** but **** *** ** ** ********* in **** *****. ** ** *** growing ** ***** ***** **** ** makes ** *** **** ***** ** video, ******, ***. ** ***** *** a ******** ********** ***** ** *************' Confidence ***** *** ***, **** ***** it **** ****?
* ******* **** ************* ** *** consumer ******, ** **** ** **** where *** *** "**** ** *****" goes. ******* **** **** *** *** of *****-********** ********* *** * **** time.
* *** *** **** **** ********** or ******* ****** *****, **** ****** software, ******** *********, *** *** ******* to **** ** * ******* ****** at *****-**** ******* ** * ****, completely ****** ***** ***** ** *** residential ****.
**********: *** ****** **** ** **** off ** * ****.
*** **** *** **** ** * surprise. ***** *** **'* *** *** Honeywell. *** **** ******* * ***** say ** ***** **** ***** *** is *******.
**** ****** ** ******** ** *** story ***** ** **** ** **** in ********:
** ******* ** ************.****** **** *********** ****** ** *** about *** ******* ****** *** ** ********* ** ** did, claiming **** *** **** *** ** attributed *** *******. *****, **** ***** investors *** ***** ******** ** ****:
****-**** *** *********** ** ********* (*** sold **** ** ** ***) *** so ***** ** **** ****** ********* regarding *** *** *******. *********, ** or *** ******** ***** *** ***** and ** ** ** *** ******** to ************* *********. *******, *** ****-*** is ******* **** ******* **** *** parent *******, *** **********, ************* ********* are prohibited from ****** ****** ** *** ****-***. Let ** *******. ** * ***** cap ****** **** ******* **** * large *** ******* ***** *********** * small *** ****-***, **** ****** **** manager’s ********** ******* ******** *** ******* from ******* *** ****-***. *** ***** reasons, **** ********* **** ***** ****** in *** ****-*** ********** ** ***** or ********** *****.
*** ********** **** ** *** *** spin-off *** **** ****** ********* ** promote *** ******* *********. ** ****, the ********** **** ** ************ ** *** ******* the *****. ***? ******* ********** ***** options *** ******* ****** ***** ** the ***** ****** ***** ** *******. The ***** *** ***** ****** *********, the ******* ***** ********* *** ******* have.
******* ***** ***** ****, * ***** later, *** ******* * **** ** the ***** **** ** ********, ***** is ***** $**:
******* **** *% ******* *** ***** the ********* *****, ***** *** ******* annual ******* ** $** *******, *** Joe *****, ***, ** ******** ******* investor **********.
*** *********** #*, **** ********* ** what ** ********** ** *** ********* in *** ******** *****:
*********
*** *******'* ****** ********* ** *** ~$2.7 ******* *** (*** ******* ****** x ~$** *** *****) ******** ** revenue ** ~$*.* *******. ** ** low ******** ** *****.
***** **** ************ / **** *********** impacts ***** ********* *** **** **** that, ** ** *** ***.
************ **** ** *** ************* ***** valuations ******** ** ***** ***** ***** those ********** ******** ***** ****** ******** to ***** **** *************. *** *******, Anixter **** ****** ~$ * ******* in ******* *** **** *** * public ****** ************** ** ~$* *******. At * ******* *****, *** *** side ** *******'* ******** ***** ***** at ~$*** *******.
*** ********* **** **** ** *** business ** ************* **** ********** **** the *** ****, **** ****** ***** has ******** **** *******. *************, **** with ****** ****** ***** **** ********* Homes **** ** ***** ** ** revenue ** ******.
********, **** ***** ************** *** ******* at * $*.* ******* *********.
*****, *** ****'** ****** *** *% on *******, *** *********. * *** assuming *** ********* *** * ****** bit ** ******-******* ****/***** ** **, but **** **** ****'** ********* ****** at **. ***** * *******'* ** too *********, *** ****** **********.
******* ************** ** ********** *** *** ***** drop **%:
***** * ******* *****? ***** **** bets!
**** ******* **** *** **** * months:
******: ******* ***** *** ******* **********, down ~**% ** ~$** ***:
*** ******* '*** **********' *******************-********** ************* ***** *********** ********.
********* ** ***** *******, ***** **** ADI ** **** *** *** ***** business ***** **** ********:
** *** ***** *******, *** *** Global ************ ******** ********* ** **** as *******. *** ******** & ********* segment *********** ******* ******* ** ******* product ******** ** *** ******* ******** and ** *** *********** ******* ********* (RTS) *** ********** ********. ** ******* the *** ******** *** ****** ** certain ****** ********** ******* *** * general ******** ****** ***** *** ********* in *** ******.
***** *** ****** "***", **** ****** gains ** * *** ****** ****.....~$**.** now ***** ** >**%...
***, **** ****.
***, ***, **'* **** ***** *****, now ***** $**: