Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Don't Let the Active IPO Stock Market Fool You

Companies / Corporate News Nov 23, 2011 - 07:38 AM GMT

By: Money_Morning

Companies

Best Financial Markets Analysis ArticleDavid Zeiler writes: Although last week was the most active for the initial public offering (IPO) market since 2010, don't expect it to be the start of a sustained wave of IPOs and a rally among volatile U.S. stocks.

Encouraged by Groupon Inc.'s (NYSE: GRPN) successful IPO Nov. 5 as well as the October rebound in the stock markets, eight stocks went public last week. They include such well-known names as Angie's List Inc. (Nasdaq: ANGI) and Delphi Automotive PLC (NYSE: DLPH).


With so many companies in the pipeline to go public - 179, according to Dealogic - it didn't take much to incite a stampede to market.

"When underwriters see a window like this, whether really open or not, they just stuff the IPO channel," Scott Sweet of research firm IPO Boutique told Reuters.

Companies also know that they only have a few weeks before the end of the year to launch an IPO, with the market essentially dormant from mid-December to mid-January. And by then, conditions could again turn too negative for comfort.

Many companies no doubt are tired of waiting on the sidelines. While the IPO market was thriving early in the year - 44 companies went public in the second quarter - activity slowed dramatically in the second half of the year. Companies were dissuaded by the raft of bad news over the summer, from the debt ceiling crisis and worries of a double dip recession in the United States to concern over the possibility that Greece would default on its sovereign debt.

After an especially volatile August, not a single IPO launched in September. That kept the number of companies going public in the third quarter to just 18, and even with last week's burst the current quarter's total stands at just 16.

Some think the sudden surge in the IPO market may signal a turnaround for stocks in general, or at least for IPOs, but many of the summer's concerns continue to hang over the markets.

"It's too early to tell which position we're in," said Money Morning Capital Waves Strategist Shah Gilani. "We could be at the starting gate for a stronger, more robust market ahead, which would be good for IPOs. Or, we just as easily could be seeing a grab for cash before the market hits the fan."

What the launch of so many IPOs in the same week gives investors is a few clues about the health of the markets - and a look under the surface shows all is not well.

Gauging the IPO Market
Even though last week saw a flurry of IPO activity, some companies are still holding off.
Bluestem Bands and WhiteSmoke are just two that had intended to go public last week or this week and instead postponed their offerings.

Also, five of last week's eight IPOs priced significantly at the low end, or below, their expected range. Of the eight that did launch, half fell on their debuts and one, Manning & Napier Inc. (NYSE: MN), was flat.

Clovis Oncology Inc. (Nasdaq: CLVS) fell about 3% in its debut, where it remains; Delphi slipped 4.5%, and is currently down about 10% from its offer price; Intermolecular Inc. (Nasdaq: IMI) dropped 5%, and has inched up only marginally since; and Digital Domain Media Group (NYSE: DDMG) fell almost 16% on its first day, and is still down 14.8% from its offer price.

"If I'm a banker, I'm not looking to follow those events," Thomas Conaghan, a partner at the law firm of McDermott Will & Emery who represents companies doing IPOs, told MarketWatch. "There is so much sensitivity now, and another deal's bad fortune leaves a bad taste in the market for further new issuance. Everyone wants to be pricing in a good environment, and a good environment is when every other IPO is trading up."

The IPOs that did trade up were: Angie's List, which rose about 25% on its first day; InvenSense Inc. (Nasdaq: INVN) that rose 37.3% in its debut, and now is up about 40% over its offer price; and Mattress Firm Holding Corp (NYSE: MFRM), which climbed 15.8%.

A ninth stock that launched the previous week, data security firm Imperva Inc. (NYSE: IMPV), rose 33% in its debut and is currently up 48% over its offer price.

"It is unsteady and volatile and hit or miss," Rick Kline, a partner with Goodwin Procter in Menlo Park, CA, told MarketWatch. "Companies like Imperva and Angie's List did terrifically well, [but at the same time] you are seeing some pricing below the range."

Forging Ahead
Despite the volatility, a few companies will forge ahead with their IPOs in the coming weeks, most notably social gaming company Zynga Inc. this Friday. Other companies that have filed recently for IPOs are Yelp Inc. and Toys R Us. Caesar's Entertainment Corp., which had postponed its IPO a year ago, said it plans to raise up to $50 million in an offering.

Caesar's typifies the unsteady IPO market - last November the company had plans to raise $532 million.

But with the Eurozone debt crisis and the failure of the congressional super committee to develop a plan to reduce the nation's debt, many see the picture for the IPO market getting cloudier, not clearer.

"I'm a little less optimistic than I was a week ago," Michael Kaplan, a partner at the law firm of Davis Polk & Wardwell LLP, where he co-heads the global capital markets group, told MarketWatch. "There are still a number of deals people are talking about bringing, but the market was down last week and it's down again today. People will be thinking, why should I go out if the market continues this way?"

Source :http://moneymorning.com/2011/11/23/dont-let-active-ipo-market-fool-you/

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: customerservice@moneymorning.com

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 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

© 2005-2022 http://www.MarketOracle.co.uk - 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