The rise and fall of the US stock market and tech company IPO’s usually go hand in hand. Investors in tech companies typically are betting on the future, but right now few are laying down those bets. Other sectors are gleaning more enthusiasm and more investor dollars now-a-days. In the past, companies with now familiar names such as Amazon.com, Netscape, and Google came on the scene with enthusiastic response.
Netscape was an early company in the technology sector’s initial public offerings.
Netscape, known for its web browser, went IPO in 1995 at $28 a share and closed at $58. However, since Facebook fell on its face, support for new ventures in technology has waned. Even stock in the big guys is not keeping up with the rest of the market. Anyone vaguely aware of the world’s love of all things technical could not help but notice that Apple stock is not keeping pace with the rest of its industry, much less the market as a whole.
With the Dow Jones Industrial Average up 15 percent this year, IPO’s from tech companies have lagged around 16 percent of new companies going public. That’s down from the average of 20 percent during hefty S&P 500 index showings. So far, out of 134 firms that have hit Wall Street with initial stock offerings this year, only 22 were technology or Internet based.
One of the success stories is ExOne, a 3D printer company that went public this February. In business since 2005, ExOne used an earlier $41 million investment to kick start it during a low point. Now it services some big names such as Ford, Tesla, and Boeing. However, if we don’t pick up the pace, we just might be in line for the worst technology IPO showing in 20 years.
In general, money is flowing out of instead of into tech stock. Mutual funds have lost millions as managers moved money. Still the outlook is not completely bleak. Most tech and Internet companies in that list of 22 have fared well after their IPO’s gaining an average of 64 percent over their initial price. Even Facebook is showing a happier face with a 52 percent increase this year finally bringing its value up over its original IPO price.
When will we get a chance to pick up some stock in the next exciting tech company? And which of those companies will be a winner? Hard to tell. Some companies are managing well without going public. The are working off capital resulting from their own successes. Others are pocketing funds from institutional investors. Even after successful IPO’s, investors turn wary when reports of weakness in a company’s internal controls over financial reporting come to light as they did following the Groupon IPO in late 2011.
Everyone was elated when Groupon completed its IPO nearly two years ago.
Looking ahead, Palantir Technologies is poised for a possible IPO. Located in California’s Silicon Valley Palantir provides interactive data analysis. They say “Our solutions have an impact on countless real-world problems in key industries including government, industry and health”. Gilt, a New York based eCommerce shop, is hinting at an IPO in its future. Selling designer fashions on line at a discount, Gilt hopes to sell its shares to the public at a premium. It’s even being tweeted that a 2014 coming out is possible for Twitter.
One company raising a lot of buzz and hoping to raise lots of money just may forego the US market and open on the Hong Kong exchange instead. Alibaba, another eCommerce company, sells anything from machinery to shoes. It is looking at a strategic move that will allow it to control its board of directors by listing outside the US regulatory arena.
In a turn-about-is-fair-play move, other Chinese firms are looking to go public in the US rather than on home turf. LightInTheBox Holding, an on line retail company selling items from sports to wedding garb, led the parade with its offering this past June. Not to be left behind, a fabless Shanghai semiconductor firm, Montage Technology Group, has indicated its desire to look for US money via Nasdaq.
So where should we invest our money? Some say that any bet on the stock market is simply a best guess coupled with a toss of the dice.
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