Top Nav

After Facebook Disaster, IPO Market Halts

Two weeks ago, the IPO market was red-hot.

Facebook (Nasdaq: FB) was about to make its record-setting debut, when it not only became the third-largest initial public offering in U.S. history but also the 11th IPO to price in the first 17 days of the month.

That brought the U.S. IPO tally to 65 new public companies in just over three and a half months, good enough to make it the busiest four-month stretch since the last four months of 2010.

Since then? Utter silence. Not a single U.S. company has gone public since the well-documented disaster that was the Facebook IPO. It has only been two weeks. But in the IPO market, that’s a lifetime.

This is the longest IPO drought by far since January, when only four companies went public on the heels of a tumultuous year for new stocks. Prior to the second half of May, there hadn’t been more than a week between IPOs since the first month of the year.

The lull is perhaps partly due to the fact that many companies rushed to get their IPOs out the door before Facebook went public, so as to ride the social network’s coattails while IPOs were en vogue. Now that Facebook has tanked since going public – the stock was down a staggering 27.5% since the company’s May 18 debut – IPOs are no longer “cool.”

In fact, it’s more than just perception. It’s probable that many companies are looking at Facebook’s post-IPO failure and wondering: If a company that well-known and that profitable gets crushed after going public, what chance do we stand?

So the IPO market could remain silent for some time. As of now, Renaissance Capital (a great source for all things IPO) only lists one stock on its upcoming IPO calendar. That’s a far cry from the past four months, when the calendar was typically booked solid with dozens of companies waiting to price.

Just as Facebook may have been responsible for jumpstarting the IPO market, it now seems that the stock’s very public struggles have effectively scared all other prospective IPOs off.

Income and Prosperity Offer

Income & Prosperity is designed to help you seek out the safest income opportunities and discover an entire world of dividend investments. This free newsletter has a laser-like focus on one issue and one issue only: how can investors near or in retirement generate more income. Each day, you'll receive our best investment idea - skewed towards safe income - but also including lesser known opportunities to grow your wealth while keeping it out of harm's way.
You've successfully subscribed, click the link in your email to confirm your subscription.
There was an error, and you have not been subscribed, please try again.