This week, this month and the first quarter of 2016 close out with just one small-cap IPO of $20 million on the calendar. Due to the U.S. stock market’s recent correction, this year’s IPO traffic has all but dried up. No record lows in volume, but close to it.
One can reach back to 1970 for comparisons, but in the mid-1970s, pricings of IPOs were basically by appointment only.
In 1975, six IPOs were priced for the entire year, according to available records, and that was down from nine in 1974.
Let’s move forward to a more meaningful time for comparison, starting with 2000. That year, the NASDAQ Composite Index closed on March 10, 2000, at its then-all time high of 5,048.62. Now here’s a sobering thought: It closed Thursday, March 24, 2016, at 4,773.50, DOWN 5.45 percent from 16 years ago.
Let’s turn the pages back to other years – to other troubled times in the U.S. stock market and how they affected the IPO calendar.
Market Conditions in 2003
From the NASDAQ Composite’s 2000 closing high on March 10, 2000, it spiraled down into a jaw-dropping loss of 77.9 percent. On Oct. 9, 2002, the NASDAQ closed at a low of 1,114.11. It goes without saying: The harshness of that bear market spilled into the first quarter of 2003. Five IPOs were priced – and only one in March. Happy to say, things improved by year’s end. The NASDAQ Composite ended 2003 at 2,003.37 – UP 50 percent for the year. The IPO market began bubbling again, wrapping up 2003 with a grand total of 84 deals. Things got better. In 2004, a total of 248 IPOs were priced.
The next major downdraft in the U.S stock market started in 2007, ran through 2008, and carried into 2009.
Market Conditions in 2009
From the NASDAQ Composite’s 2007 closing high on Oct. 31 2007, of 2,859.12, the index went on to a bone-crushing drop of 55.6 percent. On March 9, 2009, the NASDAQ closed at a low of 1,268.64. It was another harsh bear market that spilled into the first quarter of 2009. Two IPOs were priced – and only one in March. Again, things improved by year’s end. The NASDAQ Composite closed at 2,269.16 – UP 43.9 percent for the year. Once again, the IPO market started bubbling with a total of 63 deals in 2009. In 2010, a total of 165 IPOs were priced.
Market Conditions in 2016
In May 2015, two of the three major U.S. stock market indexes topped out. By Feb. 11, 2016, all three had hit their recent closing lows – losing over 10 percent each from their peaks. Since then, the indexes have reversed their corrections – recovering over 10 percent each. There are naysayers out there questioning the stock market’s recovery. But a reversal of a correction is a reversal – and this brings us to the first quarter of 2016. Six IPOs have been priced so far this year – with two of those in March. What happens for the rest of 2016 depends upon the U.S. stock market.
It is pretty clear that the IPO calendar lives and dies by market conditions.
Some Skin in the Game
Turning to this week, the calendar lists just one IPO from the health-care sector. Some call it a “biotech.” It isn’t. It is a medical device manufacturer, according to its prospectus.
Sensus Healthcare (SRTS – proposed) is a Boca Raton, Florida, medical device company offering radiation therapy devices to health-care providers. The company specializes in the treatment of non-melanoma skin cancers and other skin conditions, such as keloids, with superficial radiation therapy. Superficial radiation therapy is based on a technology with decades of successful clinical use treating various benign and malignant skin conditions, according to its prospectus.
Bankers expect to price 1.8 million shares at $10 to $12 each on Tuesday evening to trade Wednesday morning on the NASDAQ Global Market.
(For more information, please click here: Sensus Healthcare)
Looking into the week of April 4, 2016, the IPO calendar is clean and green. But the U.S. stock market’s conditions may have shifted, and there is always hope for new issues.
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 opinion.