Morgan Stanley's IPO Picks: A Tactical Look at MNTN and Hinge Health

The market is seeing a clear rebound in new listings, setting the stage for a tactical assessment of recent entrants. After a steep drop to just 90 offerings in 2022, activity has steadily recovered, with 2025 now on pace to easily surpass last year's total. The momentum is particularly strong in the second quarter, where 96 new stocks entered the market between April and June, raising a record $15.6 billion in fresh capital. This surge, which included 51 traditional IPOs and 44 SPAC deals, marks a sharp increase over the same period last year and demonstrates resilience despite persistent economic uncertainty.

The key catalyst for this renewed activity is the return of dealmaking, which had paused earlier in the quarter due to tariff volatility. As Morgan Stanley CEO Ted Pick noted, deal discussions have stayed resilient and become more active in some areas in recent weeks. This pickup is directly reflected in the bank's own underwriting book. In May, Morgan Stanley served as the lead underwriter for two significant new listings: marketing tech firm MNTN, which raised $187.2 million, and digital health company Hinge Health, which raised $437.3 million. These deals are not just routine; they are part of a broader trend where the bank is positioning itself at the center of a revitalized equity capital markets cycle.

This context frames the immediate opportunity. With IPO momentum building and a clear pipeline of new stocks, the focus shifts to identifying which of these entrants offer the best risk/reward setup. The analysis now turns to two of the most recent Morgan Stanley-led IPOs to see which one presents a more compelling tactical entry point.

MNTN: A High-Growth, High-Risk IPO Profile

The tactical setup for MNTN is defined by a stark contrast between its growth trajectory and its financial health. The company raised $187.2 million in its May IPO, a modest sum that underscores its position as a smaller player in the connected TV advertising space. Its operational momentum is clear, with revenue rising 22.6% year-over-year last quarter. Yet this top-line expansion occurs against a backdrop of persistent losses, with the company posting a negative net margin of 16.47% and a negative return on equity of 30.86%. This unprofitability is the core risk, turning a high-growth narrative into a high-stakes bet on future scalability.

The stock's current price action reflects this tension. Shares trade near $11.81, flirting with their 52-week low of $11.46. This puts the company's market cap at $522.4 million, a valuation that prices in significant future potential but offers little margin of safety. The recent insider selling adds another layer of caution, with a director cutting his stake by 43% in December and insiders collectively selling over $6 million in shares in the last 90 days.

For an event-driven strategist, the catalyst here is the IPO's own momentum. The deal was a success for Morgan Stanley, but the stock's weak performance since listing suggests the market is questioning the path to profitability. The setup is a classic high-risk entry: a company growing fast but burning cash, trading at the edge of its recent range. The upside is substantial if growth continues to outpace losses, but the downside is amplified by the lack of profitability and the recent insider activity. It's a bet on execution, not valuation.

Valuation and Analyst Sentiment: A Mixed Signal

The analyst landscape for MNTN is a study in conflicting signals, creating a confusing setup for tactical investors. On one hand, there is broad consensus on the stock's long-term potential, with an average target price of $25.83 and a collective "Moderate Buy" rating. On the other, the most recent action from a key bank has been a step back. In a report issued earlier this week, Morgan Stanley cut its price target from $22.50 to $20.50 and maintained an "equal weight" rating. This move, from a firm that led the IPO, suggests some near-term caution about the stock's valuation relative to its growth.

The range of targets underscores the uncertainty. While Morgan Stanley and UBS both now see a ceiling around $20.50, other firms like Evercore ISI and Citizens Jmp still have targets above $23, and Zacks Research recently upgraded to "strong-buy." This divergence means the stock's path is not being dictated by a single, clear catalyst but by a tug-of-war between bullish growth narratives and concerns over profitability and valuation.

Adding a layer of practical risk is the insider activity. The recent price target cut coincides with a period of significant selling by company insiders. A director, Hadi Partovi, sold 192,598 shares in December, a 43% cut to his stake. More broadly, insiders have sold 447,520 shares valued at $6.0 million over the last 90 days. For an event-driven strategist, this is a material red flag. When those with the closest view of the business are reducing exposure, it can signal a lack of conviction in the near-term price trajectory, regardless of the long-term target.

The bottom line is a mixed signal. The average price target implies substantial upside from current levels, but the recent downward revision from a lead underwriter and the notable insider selling create a near-term overhang. The setup favors patience or a wait-and-see stance, as the catalyst for a decisive move remains unclear.

Catalysts and Risks: What to Watch Next

The immediate setup for MNTN hinges on a few key events and metrics that will test the investment thesis. The primary near-term catalyst is the closing of Chime's IPO this week. As the lead underwriter, Morgan Stanley's involvement in this $832 million fintech listing could influence sentiment for new tech stocks. A strong debut and sustained pop would validate the current IPO wave and provide tailwinds for recent entrants like MNTN. Conversely, a weak performance could trigger a broader repricing of new listings, pressuring smaller, unprofitable names first.

The core risks remain unchanged but are now more acute. The stock's continued unprofitability is the fundamental overhang. Despite 22.6% revenue growth, the company posts negative margins and ROE, making its valuation a pure bet on future scalability. This is compounded by significant insider selling, with a director cutting his stake by 43% last month and insiders collectively offloading over $6 million in shares. This activity, occurring alongside a recent price target cut from a lead underwriter, creates a near-term overhang that could dampen momentum.

The next earnings report is the critical watchpoint. It will be the first major look at the company's financials since the IPO and the recent insider sales. Investors will scrutinize whether the strong top-line growth can begin to translate into improved profitability metrics or if the losses are widening. Any miss on margins or a downbeat guidance would likely break the current narrative and accelerate the stock's slide toward its 52-week low.

In short, the path forward is binary. The Chime IPO sets the market tone, while the next earnings report will determine if MNTN's growth story is gaining traction or faltering. For now, the setup is one of high risk and uncertain catalysts.