The IPO Buzz: Recovering from a Monster Wave

The recent wave of program selling that swept through Wall Street carried the Dow Jones Industrial Average and the S&P 500 Index into “correction” territory, with the Dow losing 10.4 percent and the S&P 500 dropping 10.2 percent from their record highs. A 10 percent decline from a recent high is a correction, according to Wall Street’s dictionary. A 20 percent slide from a recent high is a bear market.

From its record high set on Jan. 26, 2018, through Feb. 8, its recent low, the U.S. stock market took a pounding. It was a brutal two weeks. Then the sun started shining on Wall Street. By Friday’s close on Feb. 16, two of the three major U.S. stock indexes had recovered: The Dow closed up 5.7 percent from its Feb. 8 low, while the S&P 500 closed up 5.9 percent from its low on that date.

That is not enough to wipe out the damage, but it helps. The experts say that to break out from correction mode, the Dow and the S&P 500 must recover by 10 percent from their recent lows. That would put the Dow Jones Industrial Average at about 26,247 and the S&P 500 at about 2,840. And that puts today’s market in the hands of the gods of Wall Street.

Above-Average IPO Volume

One thing a stock market slide does is to tap on the brakes of the IPO calendar. Nevertheless, in 2018, it did not come to a complete stop. Note these numbers:

January 2018 generated 18 IPOs, according to the U.S. Securities and Exchange Commission filings. The January median average was 7.6 IPOs from 2001 through 2017. The median average is the mid-point from high to low in a series of numbers.

February 2018 has generated 13 IPOs so far – with seven trading days to go. The February median average was 12.8 IPOs from 2001 through 2017.

So there you have it: 2018’s IPO market is doing better than the median average for the last 17-year period. Now let’s move on to the future.

Short Week, Light Menu

This week is cut short by Presidents Day on Monday, when the U.S. stock market will be closed. So there are only four days for the market to do its magic. But there is an IPO calendar. It consists of a carryover from last week and two “blank check” unit offerings. They are Aspen REIT (AJAX – proposed), Crescent Funding (CFUNU – proposed) and Union Acquisition (LTN.U – proposed).

Aspen REIT is a real estate investment trust (REIT) that plans on acquiring the St. Regis Aspen Resort in Aspen, Colorado, upon completion of the offering. This is a Regulation A+ deal that is being offered on a “best efforts” basis through an “Offering Circular.” It is the carryover from last week.

Note: reported on Feb. 12, 2018, “According to a report in The Wall Street Journal, citing Dealogic, out of the eight companies that went public last year under a provision of the Jumpstart Our Business Startups (JOBS) Act known as Regulation A+, seven are trading below their offer price – an average of 42 percent lower than priced when they went public.

“The JOBS program is designed to speed up the time it takes for smaller companies to go public. The 42 percent decline in their value comes as the S&P jumped 18 percent since the beginning of 2017, and the average traditional IPO is up 22 percent since going public in 2017.”

Crescent Funding is a “blank check” company recently formed to search for a business in the financial services industry, including those in the asset management, consumer and corporate finance, capital markets, insurance and business services sectors, and the technologies used to produce, distribute and regulate these services, principally in the United States.

Union Acquisition is a “blank check” company recently formed to focus on businesses in Latin America, including but not limited to natural resources, industrial operations and the financial services and technology sectors.

(For more information about these companies and others on the IPO calendar, please check the profiles found on’s website.)

Next Week

For the week of Feb. 26, 2018, the calendar is clean and green, but anything can happen when the SEC’s filing window opens again for business on Tuesday morning.

Stay tuned.

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