IPOs Brace for Riptide in Market Climate
MarketWatch reports that there are twelve companies scheduled to make initial public offerings –IPOs– next week, though after this Thursday’s devastating crash some may be getting cold feet. “There is a shadow backlog of interest that is really large, but there is no one who will put out an IPO right now unless there is a high probability that the shares will rise in aftermarket trading,” said a Renaissance Capital Analyst.
Among the companies scheduled to make their debuts are employee-benefits provider WageWorks Inc. (WAGE), which pushed back its offering, initially scheduled this week, due to lack of demand. The company lowered its price range to $8-$9 a share from $12-$14 a share in an attempt to spur interest, yet was still forced to delay its IPO until next tuesday. Other companies that will make publicly traded debuts next week are Carbonite Inc., (NYSE:CARB) an online file-backup provider, which is looking to raise $100 million in an offering of 6.3 million shares at $15-$17 per share, and InvenSense Inc., (INVN) which provides motion sensors and software for consumer electronics. The company hopes to raise $100 million by offering 10.5 million shares at a range of $8.50-$10.50
Overall the IPO market is still up from last year, having seen 66 companies go public so far in 2011, compared to 55 debuts at the same time last year. However, as MW notes, “the number of companies that have either filed to go public or amended their filings in the last six months has shrunk. This could mean that businesses have chosen to wait until market conditions are better before going down the IPO road,” which could indicate a contraction in the IPO market in the second half of 2011, barring a major change in economic conditions.
Even some of the more successful recent IPOs were not spared from the carnage that ensued on Wall St. this week. Dunkin Brands‘ (NASDAQ:DNKN) lost over 7%, Zillow (NASDAQ:Z) was off 12.6%, LinkedIn (NYSE:LNKD) fell by 9.56%, even with a strong earnings reports, and Pandora (NYSE:P) sunk by 10.4%. Growth and tech stocks were hit harder than the wider market this week, and may be the first companies to feel the sting of a slowing economy, or (gasp) double dip recession. Speculative investment is a luxury, and given the down-trend in the state of the economy these past few weeks, the IPO market seems primed for a real slowdown in the second half.