IPO Class of 2011 Mostly Underwater
As the stock market struggles, many investors who bet on this year’s new issues are taking an outsized hit since nearly two-thirds of 2011's IPOs are below their initial offering price.
According to data-provider Dealogic, 48 of 76 new IPOs, or 63 percent, are underwater.
The poor IPO performance is reflective of the overall stock market malaise this year. New listings tend to suffer when equities in general are not performing well.
Dealogic says financial sector listings are leading the way lower, with a loss of 19.14 percent on 11 deals. Healthcare IPOs are down 9.77 percent on 12 deals.
The technology sector, which generated a lot of buzz this year with a slew of high profile deals, is flat at 0.31 percent.
On the bright side, overall IPOs delivered better results so far this year than stocks in general. Companies that went public in 2011 are down 6.5 percent, while S&P500 is down 11.5 percent.
Still half of the new IPOs are trading below the respective S&P500 performance .
Among the top performers are vacational rental website HomeAway , up 98 percent from offer price, Linkedin up 93 percent, Zillow up 75 percent, and Dunkin Brands up 33 percent.
Dealogic data shows that on a sector basis, professional services has delivered the best average returns, thanks to ratings company Neilsen Holdings , which popped 21 percent from the offer price, and Zillow.
At the bottom of the pack, according to CNBC data, are FriendFinder Networks down 73 percent, Demand Media down 55 percent, Apollo Residential Mortgage down 41 percent and Pandora down 35 percent.
Dealogic says of the top ten underwriters for U.S. registered IPOs, RBC Capital Markets has the best aftermarket performance with 7.4 percent on 6 deals.
Despite the poor data and turbulence in the overall stock market, industry insiders are not giving up on IPO activity this year.
“Though global turbulence has stymied IPO plans for some and mandated valuation adjustments for others, recent filing activity suggests going public remains a viable route for a large number of strong candidates, even if market choppiness persists,” says research and investment firm Renaissance Capital.
For the first time in over a decade, there are more than 200 deals in the U.S. IPO pipeline right now, according to Renaissance Capital.
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