Once-hot IPOs stumble as market volatility picks up
BNN Bloomberg
A banner year for tech-related initial public offerings is poised to go out on a sour note as returns dwindle in a surge of stock market volatility that’s prompted a flight to quality among investors.
A banner year for tech-related initial public offerings is poised to go out on a sour note as returns dwindle in a surge of stock market volatility that’s prompted a flight to quality among investors.
More than 130 technology IPOs raised more than US$60 billion in the U.S. this year, record hauls for both metrics, according to data compiled by Bloomberg. They comprised about one-third of the entire IPO market, excluding special purpose acquisition companies and direct listings. Recent trading returns, however, have been lackluster.
While behemoths like Apple Inc. on a record-setting spree, many newly listed tech entrants are still lagging. Software IPOs in particular have been pummeled amid broader concerns that higher interest rates will put pressure on the group’s lofty valuations.
This year’s software IPOs surged by an average of 23 per cent during their first month of trading, according to data compiled by Bloomberg. All of that rally has been erased after new listings took the brunt of the past week’s wild market swings.
Take Vian Technology Inc., for example. The maker of advertising software surged 75 per cent in its first month of trading, but has now fallen 60 per cent below the offering price.
