Monday, October 23rd, 2017

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Tech IPOs Drop Off Quickly After First Day

Tech IPOs have fallen substantially from early highs.So far 2011’s IPO market has been notable mostly for the remarkable early success of some major internet companies. But The Wall Street Journal reports that these tech IPOs have proven disappointing after the initial hype wears off.

Though the biggest planned IPO in the tech sector, Facebook, was ultimately delayed until at least next year, companies like LinkedIn, Pandora and, most recently, Groupon have kept investors interested despite the volatile market.

The Journal cites IPO data firm Dealogic noting that internet companies have seen first day gains of 28 percent, exactly four times the 7 percent growth shown by all other companies. These companies quickly decline from that peak, however, with both internet and non-internet companies down 8 percent from their IPO price.

The New York Times notes one of the major problems with this apparent underlying weakness is the expectation that some of these major IPOs, in particular Groupon, can serve to support the broader tech market.

“Until now, we haven’t had a massive tent pole, something that can create a lot of wealth for investors in Chicago, who in turn can create more wealth,” Kevin Willer, chief executive of the Chicagoland Entrepreneurial Center, told the Times.

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