Wall Street’s investment bankers will give the IPO market another shot to launch 2016 this week. On tap are four deals, looking to raise about $234 million. Last week, there were two offerings: One was pushed into this week and the other postponed due to “market conditions.” That’s the key to IPOs – “market conditions.”
Let’s take a look at the recent past as measured by the S&P 500 Index and how its swings affected the IPO market.
The S&P 500’s all-time closing high came on May 21, 2015, at 2,130.82 – and the IPO calendar produced 21 deals in May. The traffic spilled over into June with another 28 deals, according to the U.S. Securities and Exchange Commission filings. By then, the S&P 500’s closing high was in the rear-view mirror.
Let’s fast forward to the present. The S&P 500 closed Friday, Jan. 22, 2016 at 1,906.90, DOWN 10.5 percent from its previous high, and that’s correction territory.
What about IPOs? The calendar turned out two deals in December, and we are still looking for this year’s IPO market to make its debut.
Bear of a Time
A lot of people talk about 2008. Let’s step back into that ugly time frame.
The S&P 500 closed Jan. 2, 2008, at 1,447.16. That turned out to be 2008’s high. By Nov. 20, 2008, the S&P 500 had skidded to 752.44, its closing low at that time. That was DOWN 48 percent from the first of the year – deep into a bear market. The 2008 IPO calendar got off to a modest start, pricing 12 deals during January, but the sinking S&P 500 took its toll. After Labor Day in 2008, only one deal got out the door (on Nov. 18, 2008) and the next IPO was priced on Feb. 9, 2009.
For context, it’s worth keeping in mind that in less than two weeks after Labor Day in 2008, Lehman Brothers filed for bankruptcy and rattled the global markets. A little more than six months later, on March 9, 2009, the S&P 500 slid further to 676.53, its bear-market closing low.
Navigating Uncharted Waters
Now let’s turn back to the present. This year’s stock market has gotten off to a rocky start, but it is too early to count it out. After all, we still have 11 months, a presidential election and the Federal Reserve to worry about.
It has been said before, but it’s worth repeating: Stocks are bought on hope, held in greed and sold in fear. These emotions are driven by three things – interest rates, earnings and, at times, politics.
Keep On Truckin’
This week’s IPO calendar lists four names, but one seems to stand out from the others. It is AmeriQuest (AMQ – proposed).
AmeriQuest, based in Cherry Hill, New Jersey, provides advisory, group purchasing and fleet management solutions to the commercial trucking industry. The company offers group purchasing programs for fleet equipment and supplies, and it also buys and sells used trucks, tractors and trailers. It provides commercial truck financing and fleet planning, material handling programs that include lift truck, material handling and equipment procurement; roadside rescue and assistance and logistics consulting services.
(For more information, please click here: AmericiQuest)
Looking into the week of Feb. 1, 2016, the IPO calendar has two offerings looking to raise about $195 million.
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.