IPO Market Stalls Again

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A fast start to August on the heels of a busy July made it seem as if the U.S. IPO market was rolling again, fully recovered from the disastrous Facebook ( FB ) IPO back in May.

Now it seems as if the IPO market is back to square one.

It has been three weeks since the last initial public offering - issued by Hi-Crush Partners ( HCLP ) on August 15. That's the longest drought since the five-week silent period that followed Facebook's much-maligned debut on May 18.


This time, however, the silent period for the IPO market may be more seasonal than anything.

As with most areas of the stock market, August is a notoriously slow month for IPOs. In fact, the seven companies that went public last month made it the second-busiest August in the last five years.

September is hit or miss. Right now, no U.S. companies are scheduled to price in the coming days or weeks, according to the fantastic IPO web site, Renaissance Capital.

That's in line with last September, when zero U.S. companies went public all month. That was also the case in 2008 - though that September came smack dab in the middle of the worst recession since the Great Depression.

In 2009 and 2010, however, there were 10 IPOs each year in September. The U.S. IPO market would be hard-pressed to reach even half that many this September.

Market volatility could be another explanation - except that volatility was historically low in August, with the S&P 500 trading within the same 0.35% range for most of the month.

So seasonality may have more to do with this current IPO drought than other more complicated scenarios one could surmise. 

Besides, taken as a whole, the IPO market has behaved rather normally to date in 2012.

Through the year's first eight months, 91 companies went public on U.S. exchanges. Last year, the number was 96. The year before, 87 IPOs had priced through August.

You get the point.

It's true that the IPO market has gone through fits and starts since Facebook threw off its whole equilibrium. The 18 companies that went public from July 18 through August 15 actually made it one of the busiest stretches in recent memory.

So for you IPO investors ever-eager to get your hands on the next big stock, don't worry: initial public offerings will return soon enough.

For now, though, the IPO market has yet to emerge from its late-summer slumber.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: FB , HCLP

Wyatt Investment Research

Wyatt Investment Research

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