The IPO Buzz: Message in the IPO Median

By now, all of the financial media and reporting services have released their numbers on 2012’s IPO market. The averages told one figure, but the median told another. Let’s compare.
 
The IPO calendar produced 132 offerings in 2012, according to the U.S. Securities and Exchange Commission filings. That number excludes unit offerings, closed-end funds, business development companies and American Depositary Shares being offered for the first time by foreign-based companies whose shares were already traded on their national stock exchanges.
 
Running the Gamut
The calendar’s 132 IPOs raised $42.9 billion. That would make the “average” size per deal $325 million.
 
The median size was $120 million.
 
In other words, 66 IPOs raised $120 million or more and 66 IPOs raised $120 million or less.
 
Facebook (FB) was the largest.
 
On May 17, 2012, Facebook priced 421.3 million shares at $38 each to raise $16 billion. It closed its opening day on May 18 at $38.23. On Dec. 31, 2012, Facebook closed at $26.62 – DOWN 29.95 percent from its initial offering price.
 
Atossa Genetics (ATOS) was the smallest.
 
On Nov. 7, Atossa priced 800,000 shares at $5 each to raise $4 million. It closed its opening day on Nov. 8 at $4.80. On Dec. 31, Atossa closed at $3.90 – DOWN 292 percent from its initial offering price.
 
Opening-Day Pops and Flops
Generally speaking, most of the year’s IPOs got off to a good start. Consider this: Of the year’s 132 IPOs, 101 closed their opening day above their initial offering prices. Six were unchanged, and 25 finished in the losers’ column.
 
The “average” opening-day gain for the 132 IPOs of 2012 was 14.55 percent.
 
In contrast, the median opening-day gain was 7.9 percent – half finished 8 percent or above their initial offering price – and half finished 8 percent or below the IPO price.
 
*Largest Pop
Splunk (SPLK) scored the sharpest opening-day gain of the IPO Class of 2012.
 
On April 18, Splunk priced 13.5 million shares at $17 each. Splunk closed its opening day on April 19 at $35.48 – UP 108.7 percent from its initial offering price. On Dec. 31, Splunk closed at $29.02 – UP 70.7 percent from its initial offering price.
 
*Biggest Flop
AVG Technology NV (AVG) scored the sharpest opening-day loss of the IPO Class of 2012.
 
On Feb. 1, AVG Technology priced 8 million shares at $16 each. It closed its opening day on Feb. 2 at $13 – DOWN 18.8 percent from its initial offering price. On Dec. 31, AVG closed at $15.83 – DOWN 1.1 percent from its initial offering price.
 
When the Price Tops the Range
There was another feature that most in the financial media failed to cover. It was the number of IPOs priced above their original filing ranges, within range and below range.
 
A total of 37 IPOs were priced above their original filing ranges in 2012.
 
The “average” opening-day gain for IPOs priced above range was 29.9 percent.
 
The median opening-day gain for IPOs priced above range was 27.4 percent.
 
*Biggest Pop
Splunk scored the largest opening-day gain among the IPOs priced above range. It was 108.7 percent. On April 18, Splunk priced 13.5 million shares at $17 each – UP from 13.5 million shares at $8 to $10 each.
 
*Largest Flop
JAVELIN Mortgage Investment (JMI) scored the largest opening-day loss among the IPOs priced above range.
 
On Oct. 2, JAVELIN priced 7.25 million shares at $20 each, above the original filing of 6.25 million shares at $20 each. On Oct. 3, JAVELIN closed its opening day of trading at $19.60 – DOWN 2 percent from its initial offering price. On Dec. 31, JAVELIN ended at $19.09 – DOWN 4.55 percent from its IPO price.
 
When the Price Falls Within Range
Last year, a total of 39 IPOs were priced within their original filing ranges.
 
The “average” opening-day gain for the 39 IPOs priced within range was 6.89 percent.
 
The median opening-day gain for the 38 IPOs priced 39 within range was 5.43 percent.
 
*Largest Pop
Caesars Entertainment (CZR) scored the sharpest opening-day gain of any IPO priced within its filing range.
 
On Feb. 7, Caesars Entertainment priced 1.1 million shares at $9 each. It closed its opening day on Feb. 8 at $15.39 – UP 71 percent from its initial offering price. On Dec. 31, Caesar closed at $6.92 – DOWN 29.1 percent from its initial offering price.
 
*Biggest Flop
AVG Technology scored the largest opening-day loss among the IPOs priced within range. On Feb. 1, AVG’s IPO was priced at $16 per share. AVG closed its opening day on Feb. 2 at $13 – DOWN 18.8 percent from its initial offering price.
 
When the Price Drops Below Range
In 2012, a total of 56 IPOs were priced below their original filing ranges.
 
The “average” opening-day gain for the 56 IPOs priced below range was 4.76 percent.
 
The median opening-day gain for the 56 IPOs priced below range was just 1.15 percent.
 
*Largest Pop
SolarCity (SCTY) scored the sharpest opening-day gain of any IPO priced below its filing range.
 
On Dec. 12, SolarCity priced 11.5 million shares at $8 – DOWN from its filing range of 10 million shares at $13 to $15 each. It closed its opening day on Dec. 13 at $11.79 – UP 47.4 percent from its initial offering price.
 
On Dec. 31, SolarCity closed at $11.93 – UP 49.1 percent from its initial offering price.
 
(Note: Its first-day closing price of $11.79 per share was still well below the original filing of $13 to $15 per share.)
 
*Biggest Flop
Vipshop Holdings (VIPS) scored the sharpest opening-day loss of any IPO priced below its filing range.
 
On March 22, Vipshop priced 11 million shares at $6 each – DOWN from its filing range of 11.1 million shares at $8.50 to $10.50 each. It closed its opening day on March 23 at $5.50 – DOWN 15.4 percent from its initial offering price.
 
By the end of the year, though, it was a different story. On Dec. 31, Vipshop closed at $17.84 – UP 174.5 percent from its initial offering price.
 
(Note: By year’s end, Vipshop’s gain was the sharpest of the IPO Class of 2012.)
 
Secretary Reich made his point: Averages can be misleading.
 
Stay tuned.
 
Disclosure: Neither the author nor anyone else on the IPOScoop.com staff has a position in any stocks mentioned, nor do they trade or invest in IPOs. The author and IPOScoop.com staff do not issue advice, recommendations or opinions.