Has This Year’s IPO Market Already Burned Out?

2011 has seen a slew of hot young companies make their public debuts. In a period that might be known as the beginning of the social media IPO run, web 2.0 stars such as LinkedIn (NYSE:LNKD), Yandex (NASDAQ:YNDX), Pandora (NYSE:P), RenRen (NYSE:RENN), and many others hit public markets with their first common stock offerings this year. However, a piece in the NY Times today suggests that the IPO market is quickly cooling, as capital markets information servicer Dealogic reports that a total 98 offerings ($21 billion in proposed share value) were withdrawn in the second quarter this year, the highest figure since the cancellation of 129 offerings in the 4th quarter of 2000, following the burst of the tech bubble.

Foreign IPOs, which kept the market alive during the financial downturn in 2008-09, have been particularly hard hit by a lack of demand this year. In June for example, three big-name foreign IPOs, each expected to offer shares valued at over $1 billion, were withdrawn due to investors’ indifference. The hot IPO market through the first quarter this year continued a trend set late last year, as the fourth quarter of 2010 presided over one of the most valuable IPO markets in history, raising an estimated $127 billion dollars, though only 1/3 of which was attributable to US companies.

Despite Dealogic’s report that IPO demand seems to have entered a lull, investors’ appetite for alluring social media companies may remain undeterred. As Zynga, Groupon, LivingSocial (NASDAQ:AMZN) and others prepare to go public in the coming months, demand at least for these companies should remain strong. Not to mention, an upcoming IPO from fast-food stalwart Dunkin’ Brands should keep investors taste buds salivating for public offerings in the second half of the year.

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