The impact of IPOs on our economy is tremendous, so it’s little surprise that 2011 was a wild ride for the market and economy as a whole. A wave of social media companies arrived, then began to fall, leading to a complete dearth of IPOs in September immediately following the stock market tank in August. The Groupon IPO also finally saw the light of day, although its performance had several critics, and even now its price is below its offering.
Here’s a visualization that summarizes the 2011 market:
The average IPO ended the year down more than 9% with 71 of the 119 IPOs underwater. Some of this is a result of the tumultuous market conditions we’ve seen this year, but it’s also hard not to question the long-term viability of some companies–especially the ones trading more than 50% down from their offer prices, many of which are tech companies.
Some more short observations:
- Both consumer and business-facing service companies actually fared relatively well. Consumer companies likely because they’re resilient to major economic shocks (e.g. Dunkin Brands, Teavana Holdings), and business services companies as they’re bringing in new technologies such as cloud services (e.g. Tangoe, Jive).
- Despite having quite a strong beginning of the year, tech IPOs have taken a big hit since. FriendFinder Networks is the worst performing IPO, having lost more than 90% of its initial offer value.
- All real estate companies performed poorly, with the major exception being Zillow, and they’re beginning to show signs of struggle as well.
2012 looks to be at least as interesting as the last, if only because Facebook looms over the horizon. It’s truly an exciting time to be watching the IPO market.