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Tech IPO Market Cools Down

Facebook's initial public offering was not the only one that took place in the first half of the year, though no one could blame investors for thinking otherwise.

So far this year, 71 US companies have completed IPOs and raised $26.9 billion of total proceeds, according to the PwC US IPO Watch. However, IPOs dropped from 44 in the first quarter to 27 this quarter.

The second quarter started out strong, PricewaterhouseCoopers said today in a press release, but IPO activity stalled at the end of May, because ongoing global macroeconomic concerns increased market volatility and made investors skittish. Consequently, no pricings have been completed in the US since the Facebook IPO in mid-May, which raised $16 billion, PwC said.

Global market activity has also declined, PwC said. Second-quarter IPO activity dropped 65 percent from a year earlier in Europe and 40 percent in Asia.

Companies continue to register their intent to go public, fueling hope that activity will pick up in the second half of the year, PwC said in the release.

“The IPO market entered the second quarter with considerable momentum and with confidence levels supported by the high registration pipeline,” said Henri Leveque, leader of PwC's U.S. Capital Markets and Accounting Advisory Services. “However, pricing activity proved unsustainable as volatility increased along with renewed concerns over global uncertainty and other market dynamics. That said, as the markets are seeing increasingly compressed IPO windows of opportunity, our clients are now more than ever focused on readying themselves to be able to execute deals when, and not if, the windows re-open.”

The US technology sector had the most IPOs in the second quarter (eight), followed by financial services (six).

11 comments on “Tech IPO Market Cools Down

  1. SunitaT
    June 28, 2012

    IPO activity stalled at the end of May, because ongoing global macroeconomic concerns increased market volatility and made investors skittish.

    @Barbara, I think one more reason why IPO activity stalled is because investor lost confidence in IPO market after Facebook's listing. Many investors have realised now that most of the IPO's are overpriced and they can buy the same stock at lower price after its listing.

  2. Eldredge
    June 28, 2012

    @tirlapur

    I agree. Because of the Facebook situation, I think investors have become cautious, concerned about media hype and the potential for manipulation.

  3. FLYINGSCOT
    June 28, 2012

    Might we also be seeing some seasonal slowdown as people are more focused on summer vacations etc.  Summer is traditionally a slow time for the stock market.

  4. Himanshugupta
    June 28, 2012

    @Eldredge, as far as facebook's IPO is concerened, the things are unfolding and it seems that even its underwriters, Morgen Stanley, did not think that $38 was a right pricing. Inverstors will inverst in anything that makes profit or has a chance to make profit.

  5. Houngbo_Hospice
    June 28, 2012

    @FLYINGSCOT

    “Summer is traditionally a slow time for the stock market.”

    Maybe, then when do you think we should be expecting the next big IPO, in two or three  months  perharps?

  6. Houngbo_Hospice
    June 28, 2012

    Ever heard of http://www.eventbrite.com/?

    According to this prediction, Online ticketing platform Eventbrite will potentially file for IPO in late 2012.  Eventbrite recently sold its 50 millionth ticket in Feb. 2012. It earned $50 million in a funding round last May 2011. Apparently it will not be as big as FB's, but we will have something to talk about.

  7. Eldredge
    June 29, 2012

    True. The smart investors always weigh the risks against the potentail.

  8. Barbara Jorgensen
    June 29, 2012

    I do think the global economy is behind the hesitancy in IPO, but Facebook was so badly mismanaged from the get-go, I think there has also been a crisis of faith. First, the price came in under estimates. Then, NASDAQ messed up. Then, of all things, NASDAQ offers to pay for its mistake…so what's the point of gambling in the market if you can get direct payment from NASDAQ?

  9. ahdand
    June 30, 2012

    IPOs happening everywhere isnt it ? But a good sign to see the market being a bit coold down. Otherwise the shae will effect the busines

  10. Eldredge
    June 30, 2012

    @Barbara – I agree. The combination of the gloabal economy with the issues that surrounded tje Facebhook IPO undermine the faith of investors and increase the percieved risk for future IPO offerings, at least for awhile. But when the economy shows signs of improving, that qwill be short-lived.

  11. Barbara Jorgensen
    July 2, 2012

    I recently read an article that sharply criticized some of the companies that discussed going public. Similar to the bubble of 1999/2000, there are a bunch of “me-too” companies that are really just apps, not full-fledged businesses. I think Instagram–which I'm not sure ever went public–was one example of that type. Rather than revolutionize digital photography, it lets you manipulate photos you've already taken. That's already been done–it's called Photoshop. It's possible they have a mobile technology that I've missed: that certainly is the next frontier when it comes to pictures.

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