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A man stops to photograph Nasdaq in Times Square as Facebook has its IPO, Friday, May 18, 2012, in New York. (Richard Drew/AP Photo/Richard Drew)
A man stops to photograph Nasdaq in Times Square as Facebook has its IPO, Friday, May 18, 2012, in New York. (Richard Drew/AP Photo/Richard Drew)

Market View

Facebook fiasco chills global IPOs Add to ...

If Facebook can’t get an IPO right, what hope is there for everyone else?

It seems plenty of up-and-coming companies feel that way: The analysts at Renaissance Capital note that after the second-busiest April in a decade for pricings, the market for initial public offerings effectively “shut down” after Facebook’s “mismanaged” deal. Heightened market volatility also played a key role.

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Here are the numbers: Global IPO proceeds of $36.5-billion (U.S.) in the second quarter were 37 per cent below 2011’s second quarter haul. The number of deals dropped by more than half, from 126 to 58.

The global IPO market is at its lowest year-to-date level of IPOs since 2009, Renaissance Capital says.

In the U.S. alone, IPO proceeds nearly doubled year-over-year, to $22.1-billion, thanks almost entirely to the $16-billion Facebook deal. Strip that out, and proceeds fell by more than half, from $12.3-billion in 2011’s second quarter just over $6-billion in 2012. The number of deals fell from 46 to 27.

Facebook, need you be reminded, ratcheted up its price and the number of shares offered in the days leading up to its IPO. Then, after a brief blip up, shares closed the first day right around its offering price of $38. In the days that followed, it slid by a third, trading as low as $25.52. It closed Wednesday at $32.23.

Kayak Software Corp., the online airfare-comparison site, was one of a number of companies said to have watched the Facebook fiasco and punted their offering. Bloomberg News reported May 30 that the company’s late-May roadshow was postponed. Kayak planned to use Morgan Stanley, the lead underwriter for Facebook’s offering, for its deal.

Some of the top U.S. performers in the quarter, Renaissance Capital says, were small-cap technology growth stories like Splunk, up 66 per cent from its offer price, Infoblox, up 30 per cent, and Proofpoint, up 20 per cent.

 

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