The IPO Buzz: No Bubble, No Worries

The
answer to the questions raised by both of last week’s conflicting views is: “No.”
A bubble is not on the horizon. And as for the empty slate, U.S. stock market
conditions will produce an IPO calendar soon enough.

 
Past Performance

Let’s
dig into the U.S. Securities and Exchange Commission filings going back to
January 1980 and bring it up to date through November 2013. During that 34-year
time span, a total of 11,989 IPOs were priced. That makes the average annual traffic
about 353 IPOs and the average monthly traffic about 30 IPOs.

 

This
year, 219 IPOs have been priced. With one month to go in 2013, that’s still
well below the 34-year average. November 2013’s traffic of 30 IPOs was average.

 

Based
upon past performance, there are no signs of a bubble in today’s IPO market.

 
Passing
point of interest: The busiest year came in 1996 when 874 IPOs made their
debuts. And there’s more. The largest dollar amount raised was $100.6 billion
in 1999. So far in 2013, almost $49 billion has been raised.

 

 

 
Empty Calendar

Under
the JOBs Act, we are looking at a vastly different IPO market than in past
years. In today’s market, a company can submit plans to go public using what is
called a “confidential” filing. Once the paperwork and other steps are completed,
it becomes a waiting game – a company waits for favorable market conditions to
file its formal document – the S-1 Form. Recent examples show a company can file
its S-1, jump on the IPO calendar and walk out the door in a matter of a few
weeks or sooner.

 

 
Worth
noting: The incubator of the IPO calendar is the U.S. stock market. Good markets
produce IPOs. Poor markets dry up the calendar. It’s been that way for decades.

 
So how are
today’s market conditions?

 

 
The
granddaddy of the stock market indexes, the Dow Jones Industrial Average, closed on Friday, Nov. 22, at an
all-time high as did the S&P 500 Index. And the NASDAQ Composite closed at levels it has not seen in over 13 years –
not since April 11, 2000, to be exact.   

 
With
these favorable trade winds, can the IPO calendar be far behind?

 
Stay tuned.

 

 

 
Disclosure:
Neither the author nor anyone else on the IPOScoop.com staff has a
position in any stocks mentioned, nor do we trade or invest in IPOs. The author
and IPOScoop.com staff do not issue advice, recommendations or opinions.