Black and White Program

Recent IPO offerings: Wall Street testers?

July 19th, 2012 by John Eastman

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It’s been approximately 2 months since the initial public offering (IPO) of Facebook $FB.  Currently trading in the range of $29.00, (a steep fall from its $38.00 to $45.00 range at IPO), the $62 Billion Market Cap social media centric company dirtied the water for IPO’s, tech and otherwise. Viewed as excessive, overvalued, generally and legally problem ridden, (plaintiffs in lawsuits claim they were misled, that the company and banks didn’t disclose lower revenue estimates before the share sale) and still the talk of angry shareholders who felt oversold by Morgan Stanley $MS, Goldman Sachs Group Inc. $GS and JPMorgan Chase & Co. $JPM, the social media giant could become an adjective for future IPO’s – as in “that’s a Facebook IPO”.  Time will tell but memories tend to be short regarding Wall Street practices.

But if Facebook and its gang of banks did muddy the water for other IPO’s, that water could clear soon as other firms and their investment banks have geared up and pushed new offerings recently, albeit small in compared to Facebook and other large firms prior.

Internet firewall maker Palo Alto Networks Inc. $PANW raised $260.4 million in its initial public offering, selling 6.2 million shares at $42 according to a company statement.

Kayak Software Corp. $KYAK, raised $91 million in its initial public offering, selling 3.5 million shares at $26 each, and will trade on NASDAQ. The online travel firm reportedly had an earlier IPO scheduled, but withdrew it as investors dampened their interest in tech IPO’s after Facebook related news events. Morgan Stanley and Deutsche Bank AG led the offering for Kayak.

Shares in Five Below Inc. a 200 store operation which sells games and candy (for under $5.00) targeting children in the under twelve market, traded at $17.00 to $26.00 range per share in its IPO, raising over $163 million on 9.6 million shares sold.

One could argue that Wall Street banks are viewing these small IPO’s as testers to gauge investors’ appetite and to plan further IPO’s throughout the remainder of the year.

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