The IPO Buzz: Getting A Handle On 2015

The financial media’s headlines have been blaring: “2015 – The Worst Year for IPOs Since 2009” and it was. On the other hand, the year was not as bad as reported. Reaching back through the stats to 2005, the IPO traffic for this year turned out to be the mean point between 2005 and 2015.

For 2015, IPOScoop.com identified a total of 173 IPOs. Our findings are based upon information gathered from the U.S. Securities and Exchange Commission and cross-referenced with NASDAQ’s “IPO Activity” chart.

The five years that produced fewer IPOs than 2015 were: 2008 (50 IPOs – the fewest), 2009, 2010, 2011 and 2012.

The five years that produced more IPOs than 2015 were 2005, 2006, 2007, 2013 and 2014 (286 IPOs – the most).

Our IPO Yardstick

IPOScoop.com’s count might differ from others as we use a different yardstick in determining what constitutes an initial public offering – an IPO. We include unit offerings consisting of common stock plus warrants and real estate investment trusts, also known as REITs.

We exclude “best effort” offerings, bank conversions and offerings that represent securities already traded elsewhere. One example would be American Depositary Shares representing ordinary shares traded on the Euronext Brussels. There were three such deals in 2015. Another example is a company offering what is called an “IPO,” but its stock is traded on the U.S. OTCBB. That happened at least twice in 2015.

A Rocky Road

Now let’s take a look at the underpinnings of the IPO calendar and how the U.S. stock market influences IPO traffic.

The wheels of this year’s IPO market became a little wobbly by mid-August. The calendar had generated 133 IPOs, down from 196 in 2014 over the same period a year ago. The reason for the IPO market’s slower pace was staring everyone in the face. It was the stock market.

Consider the following: By Aug. 31, 2015, two of the three major stock market indexes were in the red for the year. The Dow Jones Industrial Average closed on Aug. 31 at 16,528.03, DOWN 7.3 percent for the year, and the S&P 500 ended at 1,972.18, DOWN 4.2 percent, while the NASDAQ Composite Index closed at 4,776.51, UP 0.9 percent for 2015. From past experience, a sloppy stock market like this has never been the breeding ground for a bubbly IPO market. That was true again this year.

By the end of the year, the U.S. stock market indexes had improved. At the U.S. stock market’s early close on Dec. 24 for Christmas Eve, the DJIA was UP 6.2 percent from Aug. 31, while the S&P 500 was UP 4.5 percent, and the NASDAQ was UP 5.7 percent. Investors, however, had other things on their minds, such as the U.S. Federal Reserve and its interest-rate increase, the price of oil, China’s economy and the volatility in today’s stock market. The IPO calendar became an afterthought. Only 40 IPOs were priced after Aug. 31; just two got done in December.

Looking ahead at a short four-day trading week, the IPO calendar remains clean and green for this week as we close the books on 2015 and anticipate opening them for 2016. The U.S. stock market will be closed on Friday for New Year’s Day.

Happy New Year to all!

Stay tuned.