The IPO Toilet
You know that feeling you get when you work out for the first time in a while? The adrenaline shoots through your body, the sweat warms you up, you step outside feeling like new...and then the next day. Boom! You feel like you've been beaten in your sleep. Everything hurts and what doesn't hurt... doesn't work.
That is the sad state of affairs in the IPO market these days. The once bread and butter of investment banking is hardly capable of feeding a toddler let alone the army of starving bankers out there looking to bolster their bonus checks. The worst part of the equation is that there really isn't much anyone can do about it and relief, as well as, any sort of viable alternative is nowhere in sight. Unfortunately, the struggles of the IPO market are the struggles of the economy at large. Read it and weep, guys.
More than half of the U.S.-based companies making their domestic stock-market debuts this year are trading below their offer price, an ominous backdrop for any companies hoping to come public.For any investor who bought—and held—these so-called underwater stocks in their portfolios over the course of the year, it is a painful reminder that even deals that did well their first day in the spotlight can crater later.
Among the companies trading below their IPO prices are Internet radio firm Pandora Media Inc., which popped 8.9% on its first day of trading during its debut in June, and physicians' hand-held software maker Epocrates Inc., which gained 37% in its first day in February.
The poor year-to-date performance among U.S.-based companies—so far this year, 63% of the 76 new listings are underwater, according to data tracker Dealogic—can be blamed primarily on the overall stock market, which itself has been sinking for the past two months. When stocks in general aren't doing well, IPOs suffer in turn and companies reconsider the listing plans.
The one bright side is that so far this year, IPOs have outperformed stocks. Though it is sort of like celebrating a Mets preseason win over the University of Michigan's backups, you have to have a firm grip on that silver lining like JP Morgan on a Bear Stearns futures position.
Also among the stalwarts has been my old pal Zillow. Still cannot for the life of me figure out how this dog with fleas keeps on pushing but it is a sign that all the smarts and analytics go out the window in times of uncertainty. Here's to a better day...
Better days indeed...[clinks glass, downs it]
I'm thinking that a lot of companies are holding off with the hopes that a Republican becomes president next year. If I were in their position, I would. There is one catch: they're going to have to do it sometime, and if Obama is reelected, I think we'll see some action anyway.
Do you ever get the feeling that sometimes the business cycle is a self fullfilling prophesy?
Stands to reason. Problem is that even though booting Obama may jolt markets in the short term, switching from Bud to Bud Light doesn't change the fact that you are swigging piss.
Of silver spooned idiots who could learn a ton about it from my mechanic.
Why would a banker even be talking to a mechanic?
Maybe people are finally realizing that these web 2.0 pieces of dogshit are worth exactly that. These were only IPO'ed for a quick pump and dump, no other reason. Each one of the web 2.0's has a free alternative somewhere, guaranteed. People will never pay for something they can get for free. That's the best part of the internet, thanks Al Gore!
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