IPO Analysis


IPO analysis observed several trends in the IPO market in the last couple of years. Not all companies listed on the exchange succeeded though. The article below highlights the trends in the IPO market in the last few years.

Experts reviewing the markets have kept a close watch on the IPOs or the initial public offer. IPO analysis has indicated that there are many companies, awaiting their listing on the stock exchange. On the other had, there were few companies who had their timelines extended and also lessen their price points.

In general, if the IPO market is “frothy”, a “temporary” or “intermediate market top” is implied. Another expert view suggests that the promoters as well as the merchant bankers were sailing in the same boat. It is felt that investors need to weigh the pros and cons prior to taking the plunge. The investors ought to avoid listing prices of the “grey market”, which may be anomalous due to manipulation.

IPO analysis showing IPO trends:

Studies reveal that the year 2004 was a year when several IPOs were seen. In fact, statistical data proved that in the same year (2004) as many as 242 initial public offerings were launched. This figure in fact far outnumbered the IPOs of the previous years, 2001 to 2003 taken together. The returns from the stock offerings were also handsome and proved to be advantageous for the investors who dared to invest in the turbid waters. Statistics imply that majority of the companies, which were listed on the stock exchange in the year 2004 had a yearly sales record below $50 million.

However, things were not the same for all the companies. There were certain companies, which did not make enough profit. It was found in the year 2004, that about 4 out of the 10 companies, which became listed on the stock exchange, approximately, 39% of them did not earn profits. This situation was however better than the days of 1999-2000, when the 74% of new publicly listed companies lost.

Another trend, which has been observed from IPO analysis indicates that there are certain drug making companies(pharmaceutical companies), which have a tendency to get listed on the stock exchange even before they start earning profits. The reason may be attributed to the fact that these companies usually take longer period for manufacturing medical equipments and medicines. This is in sharp contrast to majority of the companies, which usually manifest profitability for a period of 6 months (at least) prior to trading on the stock exchange.

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Last Updated on : 30th July 2013

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