The best thing that can be said for today’s stock market is that it is in a consolidation phase. It’s not in a correction. And it’s certainly not in a bear market. Any way you look at it, this is not a breeding ground for an IPO market.
It was down and dirty around the IPO pricing window last week. Ten deals came to market. All were priced below their original offering terms. Marking down merchandise usually does not give investors magical first-day returns. This time proved to be the exception to the rule. They caught lightning in a bottle.
A 410-point freefall in the Dow Jones Industrial Average last week during a two-day span raised concerns about the outlook for the future IPO calendar. So far this year, there have been two other periods marked by a two-day drop of 400-plus points in the Dow, and neither slowed the IPO traffic.
It looks like fast times in the IPO market these days. Since the beginning of March 2014, 58 companies filed to go public, 58 companies updated their filing plans, and 39 IPOs have been priced, according to the U.S. Securities and Exchange Commission filings. As impressive as these numbers are, today’s IPO calendar is not in a bubble mode. Actually, today’s traffic is BELOW the average for the last 34 years.
The good, the bad and the ugly all surfaced in last week’s IPO market. None were expected.
Last week’s newly minted IPOs danced among the stars. Experts expect pretty much the same from this week’s calendar. It has 11 deals looking to raise over $2 billion. Among them are a couple of cloud-computer companies, four from the financial sector, and oh, yes, Candy Crush Saga is going public.
Tech IPOs have arrived. Six of the 11 names on this week’s new-issues calendar are technology deals. And the sector’s aftermarket performance has been soaring.
Fasten your seatbelts for a wild ride on the IPO highway. The technology sector is arriving. There is one deal on this week’s calendar plus three on next week’s; the filings continue to build, and their aftermarket performances are breathtaking.
The year’s first tech IPO popped with an opening-day moonshot, 2013’s last tech IPO lit up the sky with an opening-day starburst – and this week’s calendar features a tech IPO called Coupons.com.
There are only two deals on this week’s IPO calendar. Each has a message. One borrows from the wisdom of the racetrack. The other is a litmus test for what could be a wave of technology IPOs.