Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Tech Stocks Set to Fuel Resurgent U.S. IPO Market

Companies / Tech Stocks Mar 04, 2011 - 07:44 AM GMT

By: Money_Morning


Best Financial Markets Analysis ArticleJason Simpkins writes: After falling off the radar for three years, the U.S. IPO market is off to its best start since before the financial crisis. And with several high profile technology companies set to go public this year, it's likely to carry that momentum forward.

Companies around the globe have raised more than $26 billion through initial public offerings (IPOs) this year, a 20% increase over last year and the best start on record, according to Dealogic. Globally, 15 IPOs were crammed into the first two weeks of February - a month that last year had seen a total of just four IPOs.

Not since 2007, when 17 companies listed, has the IPO market been so active. By comparison, just three companies listed in February 2009 and four in 2010.

A big reason for the increase was a flurry of activity in the United States, which had previously lagged the Asia Pacific region. There were 24 U.S. IPOs in the first month and a half of the year, compared to 13 during the same period in 2010, according to IPO research firm Renaissance Capital in a Feb. 23 report.

The largest IPO so far this year has been Kinder Morgan Inc. (NYSE: KMI), which raised $2.86 billion through its Feb. 10 offering. The company raised a total of $3.29 billion after underwriters exercised an overallotment option, making it the largest U.S. energy IPO in more than a decade.

With Kinder Morgan taking the lead, U.S. IPOs raised a total of $8.1 billion by mid-February - up from $1.9 billion last year, according to Renaissance.

"After strong IPO issuance in November and December, the IPO market seems to be sustaining the momentum seen at the end of 2010," Renaissance said. "These are signs that the IPO market is back to normal levels of issuance that is expected in a growing economy."

The firm said the United States would continue to lead the world, as 34 companies are still on tap for IPOs this year. Dealogic's IPO backlog stands at $48 billion, with about a third of that destined for U.S. markets.

What's more impressive, though, is that the U.S. companies set to go public in the weeks and months ahead are healthy prospects with solid fundamentals - not paper tigers.

"Most of the companies that are in registration or are starting the process, are companies that have really good prospects," Mark Baudler, a partner at Wilson Sonsini Goodrich & Rosati, told MarketWatch. "It's not fly-by-night companies hoping beyond hope that there is a way to get out the door. The pipeline is so good that the best companies are at the front of the line."

One such company is Hospital Corporation of America (HCA) Holdings, which aims to raise $3.5 billion when it lists on the New York Stock Exchange (NYSE) next week.

HCA is the largest non-governmental hospital operator in the United States and a leading comprehensive, integrated provider of health care and related services.

Hospital companies have been in an upswing for the past six months, with four of the most commonly followed stocks up 49% on average in the last six months. Community Health Systems (NYSE: CYH) is up 43%, Health Management Association Inc. (HMA) is up 47%, Tenet Healthcare Corp. (NYSE: THC) 61%, and Universal Health Services Inc. (NYSE: UHS) is up 45%.

Still, the most fertile ground for IPOs has been the technology sector. The seven technology companies to go public in the first month and a half of the year raised a total of $700 million, according to Renaissance.

Nielsen Holdings NV (NYSE: NLSN) was the headliner, raising $1.75 billion in its listing.

Most all of the tech companies to go public this year - Nielson, Demand Media Inc. (NYSE: DMD), InterXion Holding N.V. (NYSE: INXN), BCD Semiconductor Manufacturing Limited (Nasdaq: BCDS), and NeoPhotonics Corporation (NYSE: NPTN) - are trading above their IPO prices.

"Investors want to play the big themes in technology, such as cloud computing data storage and security, and it is hard to get that exposure by owning big technology companies," Eric Mandl, global head of software and large-cap tech banking at UBS AG (NYSE: UBS) told the Financial Times.

Right now, no technology theme is hotter than social networking, and three big players are about to go public.

In the Pipeline
Though none of them have set a date, Groupon, LinkedIn Corp., and Skype Ltd. are among the tech heavyweights expected to list this year.

With so much buzz surrounding Facebook Inc. and Twitter Inc. - neither of which have announced any intention to go public - these companies are often overlooked. But these are three of the world's most unique and successful social networking companies.

And more importantly, they have demonstrated profitability, scores of potential and valuations that aren't quite as overblown as Facebook and Twitter.

Groupon, the deal-of-the-day site that spurned a $6 billion takeover offer from Google Inc. (Nasdaq: GOOG), may have the biggest offering this year. The company expects its debut to raise $15 billion or more. NeXtup figured a potential $40-per-share price for Groupon, based on an initial public offering of 165 million shares.

The company just raised a record $950 million from big investors, including Fidelity Investments, T. Rowe Price Group Inc. (Nasdaq: TROW) and Morgan Stanley (NYSE: MS).

The Wall Street Journal recently cited a memo from Groupon Chief Executive Officer Andrew Mason as saying his company's revenue rose to $760 million in 2010 - a 20-fold increase from $33 million in 2009.

"The earth is super old - thousands of years, some say - and no one has ever done anything like this," Mason said in the memo to his employees. "You should all exude a borderline-annoying sense of pride in what you've achieved. You should be wearing a big, toothy grin - the kind that makes people want to punch you in the face. No one deserves to be as happy as you are right now."

Groupon offers its members discounts of up to 70% on local services, provided enough members sign up for any single offer. It then takes a commission of 30% to 50% from the merchants who provide the services.

The company grew to 50 million from 3 million users across 500 cities in 40 countries over the course of 2010.

LinkedIn, the social networking site for professionals, has more than 90 million users in 200 countries. The estimated value of the company is about $2 billion, following a $20 million investment from Tiger Global Management last July. It is seeking to raise another $175 million in its IPO.

LinkedIn's sales more than tripled from 2007 to 2009, led by increased revenue from advertising, premium accounts, and job listings. The company posted a profit of $1.85 million in the nine months through September 2010 and revenue doubled to $161.4 million. That compared with a net loss of $3.4 million and revenue of $80.8 million a year earlier.

Skype is set to have a comparable listing. The Internet calling service aims to raise $100 million in an IPO this fall. The company claims to have 27 million users online during its peak hours, up from 15 million a year ago.

The company's goal is to collect 1 billion users; analysts say that's achievable if more businesses adopt the technology.

Skype over the past several years has already built a loyal user base.

"As a result, businesses will give Skype a chance," Peter Fader, a marketing professor at the Wharton School of Business told Telemanagement. "The Skype name is already a verb [as in 'skyping' with someone] and can certainly go down the business-to-business path. That's where the money is."

Indeed, unlike the tech boom of the late 90s, Groupon, LinkedIn, and Skype have solid fundamentals and huge potential. And they're likely to keep the U.S. IPO market churning through 2011.

"I think the IPO market is as healthy now as I have seen it in 15 years, and that is because it is still very selective," Lise Buyer, principal of Class V Group in Silicon Valley, which guides private companies through the IPO process, told MarketWatch. "Companies have truly compelling stories, acceptable fundamentals and a truly strong management team."

Source :

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email:

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in