Friday, November 04, 2011

Evil IPOs

Check out the top 25 IPOs in the last two years. Of that, 20 of them have tanked:

Click on the figure to see the enlarged version. This post is in conjunction with Groupon's IPO later today. I mean, seriously, people. Stay away from IPOs, especially the hot ones. Here is why:
On average the 25 hot IPOs here have slipped 31% from their opening price. The total for all 333 IPOs from 2010/11 for which Bloomberg has data is -11.1%. And the average pop was about 7.7 percent. So you might call that normal. 
For those who want a deeper dive into the data: Those numbers include those hot 25. If you take them out, the average pop was just 3.4% and the drop since the IPO was 7.5%. Since the start of trading, the hot IPOs clearly did worse than others.
HT: Bloomberg Businessweek