Fallout From The Crash: IPOs

IPOs got sidelined by the crash: only two of the eight offerings completed, both below price expectations. Two hope to price this week, but the other four were "postponed," a polite way of saying canceled. Overseas, three large deals were postponed. So far 18 19 US IPOs have been postponed or withdrawn. 

Things improved this week, with seven of ten going out, but they priced at the low end of the range or below (eg. Telenav today).

I measure the health of IPOs by venture-backed deals, new companies with huge promise, much as new home sales is the best indicator of the health of housing. On this score, the market looks weak:

• MERU (WiFi) opened strong but has given back almost all
• AOSL (semiconductors) opened flat two weeks ago and is down 20%
• CNVO (on-demand software) was strong two weeks ago and is hanging on at 5% up
• SS&C (fund mgmt software ) opened flat, rose a bit, and is hanging on at 5% up
• CALX (telecomm equipment) opened poorly and is down 20%
• FNGN (pension software) popped up 44% at opening and remains 30% up
• QNST (online lead generation) priced below the range and fell, but is now up 10%
• TNAV (navigation software) priced below the range after lowering the offering size

After MERU did well, I had been watching the next 2000-era venture backed IPO, Nexsan (NXSN); but Nexsan had to postpone its IPO due to a bad announcement of a competitor. The venture press is playing up the TeleNav offering, noting that while it priced at $8, well below its $11-13 range, it rose to $9.80. The other two IPOs the same day both dropped. Maybe a hopeful sign, but a bitter-sweet success at best.

 

After TeleNav, the next test is ReachLocal (RLOC), which figured out how to do Google-like online ads for local businesses. RLOC was on the road in Europe last week (fun!) and is expected to price next week. This will provide a very good barometer of the tech IPO appetite following the crash. 

The WSJ has an upbeat article on start-ups this week, noting that 14 venture-backed companies have gone IPO so far this year, compared with only 8 in all of 2009 and 7 in 2008 - but what terrible years to be  compared with!  This chart from the article shows the ebbs and flows of IPOs:

 

We remain below the Q1 pace of 2006-7. In addition, last week 15 ventures got bought, a pretty good clip. If the IPO window continues to weaken or close, however, expect such m&a to continue, but at low prices - successful IPOs drive up m&a prices, weak IPOs embolden bargain-hunting. The WSJ piece ends with a good summary of the fallout from the crash last week:

Only a few start-ups are making the cut for deals and IPOs. ... Many other start-ups continue to struggle, leaving their venture-capital investors unable to sell them or take them public. Last week's volatility in the stock market, compounded by a still-fragile global economy, may also freeze further activity. 

Note: I have a small indirect interest in RLOC and NXSN. 

Comments

[Mamma Boom Boom]

>The R/R, of being long stocks, has now shifted to dead neutral.

Posted by: Mamma Boom Boom | Wednesday, May 12, 2010 at 12:20 PM<

Funny how that stuff works out, ain't it!

BTW, seem like you would have to have on heck of a business plan to convince any IPO buyers in this market.

[Major Crash Alert]

=========== MAJOR WARNING FROM ARCH CRAWFORD ================

Arch: Well, yes. We are coming up to the largest alignment of planets. That means some opposite some others, and forming an angle of a square with Pluto. It’s the biggest one that we have ever seen. I checked back close to 100 years, and it’s the largest energy impact that I have ever seen.

I calculate the Bradley Model, which is totally astronomic related, and it often predicts what the market will do. Well, a colleague in Vienna, Austria, calculated the Bradley Model actually back 200 years, and he said it will hit a new low for that time period this summer. Probably, July 30/August 1 time period.

I mentioned this at an astrology group conference in Cambridge, Mass, and one fellow stood up and said, I checked it back a 1,000 years and there is nothing like it. And another fellow popped up and said, I have checked it back 10,000 years and there is nothing like it.

So in terms of natural cycles, this is the crux or the height or the maximum of anything that we have seen in all of recorded history.

Jay: Okay. So Arch, when does this happen? Are we on the verge of it now?

Arch: Well, it maximizes around August 1. And I am saying that the market will probably crash between May 1 and November 1. That is not to say that it will start down May 1 and end the down in November. It means that sometime during that period we are going to come to a crisis point and have one of the biggest crashes and one of the worst down markets in history.

http://www.goldinvestor.com/articles/market-warnings-and-more-from-arch-crawford-and-gijsbert-groenewegen.html

[Major Crash Alert]

>>And another fellow popped up and said, I have checked it back 10,000 years and there is nothing like it.

>>So in terms of natural cycles, this is the crux or the height or the maximum of anything that we have seen in all of recorded history.

Fasten your seatbelts folks. Bradley Model is predicting something BIG for 2010.

[Mamma Boom Boom]

Major Crash Alert, he's not totally laughable, he has made some good calls. But, it's always about timing.

[Mel]

Here's the audio...

http://audio.marketviews.tv/audiofiles/synd/crawford28.mp3

[Michael]

"I calculate the Bradley Model, which is totally astronomic related, and it often predicts what the market will do. Well, a colleague in Vienna, Austria, calculated the Bradley Model actually back 200 years, and he said it will hit a new low for that time period this summer. Probably, July 30/August 1 time period." - Arch Crawford

As someone who has actually spoken to Arch over the phone on several occasions, I would strongly suggest that he make readers fully aware of the fact that the Bradley Siderograph merely predicts TURNING POINTS and not the polarity. Just because the Bradley hits a new low for the year on August 10th doesn't necessarily mean that it is marking a LOW in the market. It could be a HIGH.

On another note, it is clear to me and others that have studied the Bradley ( as Yelnick has pointed out in a recent article ) that the correlation of the Bradley and significant turning points in the US equity market over the last several years has been downright horrible - - - and not the slightest bit statistically significant.

http://www.marketmulticycles.com/marketmulticycles9.htm

See for yourself.

[Roger D.]

Arch is talking about the "Cardinal climax".

http://seekingalpha.com/instablog/234091-hewitt-heiserman/61457-rare-cardinal-climax-planetary-alignment-this-summer-puts-stocks-at-risk-says-veteran-sky-watcher

[Mel]

Remember the book Jupiter Effect -http://en.wikipedia.org/wiki/Jupiter_Effect

Big earthquake didnt occur, but a MAJOR LOW in the Stock Market DID.

Remember the May 5, 2000 planetary alignment fears -
http://tkcs-collins.com/truman/conjunct/conjunct.shtml

Polar shifts, tidal waves, cataclysms did not occur, but a MAJOR HIGH in the Stock Market did.

Watch 2010 alignment for yourself....link back to this post once it concludes how it turned out.

[Mel]

Heading into the worse part of Kondratieff Winter.....

THE CARDINAL CLIMAX: 2008-2012 - WE ARE HERE

http://www.mmacycles.com/articles/articles/the-cardinal-climax:-2008%112015/

"And then the final segment of this powerful celestial set up ends with the seven passage series of Uranus in waxing square to Pluto, June 24, 2012 through March 17, 2015. This later signature may be the most important part of the whole pattern, for it doesn’t happen too often. The last occurrence was in 1876-77. In between, there was a waning square between these same two planets in 1932-1933. Both of these times coincided with economic depressions and severe stock market losses."

[yelnick]

Mamma, could you remember to turn off italics (ie use the command in html) when you use them? Otherwise all the comments that follow get italicized. Thanks!

[usdollar]

webbot guys says that may 6 and july 11 is a precurser to event to nov 9 going on to about jan 23. Something much nastier than 9/11 but not terrorist driven. Maybe derivatives collaps? They have a data gap between March 2012 and July 2013. Might be because sun storm kills all electric on planet. Prechters Dow 40 would fit in to this scenario.

[Account Deleted]

Anyone(Pretcher and his followers) thinking of DOW 40 shouldnt be left to roam about open in public.For public safety such lunatics should be kept under tight security in LUNATIC ASYLUM.These can be very dangerous for the society.

[Mamma Boom Boom]

>Mamma, could you remember to turn off italics<

Sure, I didn't realize I was causing that.