The IPO Buzz: Techs Gone Wild

 

By the close of business on Friday, June 29, 44 tech IPOs had been priced, which accounted for 43.1 percent of this year’s traffic. Their aftermarket performances have far outpaced everything in sight, but more on this later.

 

During the year’s first six months, bankers priced 102 IPOs, according to U.S. Securities and Exchange Commission filings. Excluded were unit offerings, bank conversions, closed-end funds and American Depositary Shares of foreign companies trading on their own national stock exchanges.

 

That was the busiest first half since 2000, when bankers got 238 IPOs out the door. For the record, 431 IPOs were priced for all of 2000.

 

Here’s the IPO Scorecard for 2007’s first half:

IPOs priced: 102

 

This year’s overall IPO aftermarket outperformed the underlying stock market by 92.8 percent.

 

Non-tech IPOs priced: 58

 

This year’s non-tech IPO aftermarket outperformed the underlying stock market by 19.4 percent.

 

Tech IPOs priced: 44

 

This year’s tech IPO aftermarket outperformed the underlying stock market by 199.5 percent.

 

The driving force behind the IPO market has been the technology-laden Nasdaq Composite Index.

 

Historically speaking, most of the deals coming from the IPO calendar are technology companies, and about 70 percent of all IPOs are listed on the NASDAQ market. (The NASDAQ’s listing requirements are less stringent than those of the New York Stock Exchange — and less costly.)

 

Now back to the present. The Nasdaq Composite Index was the best performer of the major stock indexes for 2007 so far. It was up 7.78 percent through Friday, June 29, the last trading day in the year’s first half. In comparison, the Dow Jones Industrial Average was up 7.59 percent and the Standard & Poor’s 500 Index was up 6 percent.

 

But there was more fuel to the Nasdaq Composite’s fire than most realized.

 

The common thread in all three major stock indexes’ performance was October 9, 2002. That’s the date each closed at their lows.

 

In the second quarter this year, the Dow and the S&P 500  made headlines with record closing highs. But they’ve been playing second fiddle to the Nasdaq Composite.

 

At the close on Friday, June 29, 2007, the blue-chip Dow average was up 84 percent from its Oct. 9, 2002, closing low. At Friday’s closing bell, the S&P 500 was up 93.5 percent and the overlooked Nasdaq Composite was up 133.7 percent, both from their closing lows on Oct. 9, 2002.

 

A performance like that opened the door to the IPO market and its tech deals in the new-issues pipeline.

 

The IPO party historically stalls when the Fourth of July holiday appears on the calendar. This year is no different. Well, that’s not quite accurate.

 

Several news services are reporting that Silver Spring Bank (Nasdaq: SSBX proposed), a Nevada-based bank holding company, plans to price an IPO of 3.2 million shares at $22 to $24 each this week.

 

Nota bene: The deal is a secondary offering, not an IPO.

 

Its shares have been trading on the OTC bulletin board under the symbol SSBX.OB for the last decade.

 

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