2017 is miles ahead of 2016 when it comes to IPOs.
Instead of the mere two tech IPOs we had this time last year, there have been at least 10, depending on what you count as a tech shop. In late May 2016, only SecureWorks and Acacia Communications had made it public. This year’s late-May list includes Snap, Cloudera and Okta, among others.
The resurgence of IPOs and some strong ensuing performances has brought back the talk of companies “leaving money on the table” during their debut. IPOs that do during their first trading sessions could have raised more money during their IPO, at least in theory. Therefore, large IPO pops can be construed as mistakes.
At least to some.
But a few weeks ago, we took a look at that matter in the wake of two recent IPOs’ dramatic earnings-driving repricing. What looked like a pop before simply boiled away after investors decided that growth simply wasn’t going to meet expectations.
So if pops are hard to vet, and IPO pricing remains an art-science hybrid, what measuring stick can we use to decide when an IPO did well, versus gains so steep that it probably could have raised a bit more in its flotation?
Goldilocks and the three IPO results
Last week on Equity, IPO and M&A lawyer Rick Kline talked us through IPO pops and where his perspective lands. Kline, to explain why we care about what he thinks, worked on the Atlassian IPO, Hortonworks’ debut, Snap’s flotation and Box’s IPO, among others.
If you are more of an audio person than a reader, head here and tune in around the 4:20 mark for about three minutes. For those of you unwilling to pause your tunes, here’s Kline’s view:
- Companies picking up a 25 to 35 percent pop “is perfect.”
- If a firm comes close to a 50 percent pop, it may…