Now that 3Q is in the books it was no surprise that there weren’t many initial public offerings (IPOs) during the quarter. In fact, there were only 12 companies that were brave enough to make their debuts and they only raised $1.9 billion. It marked the slowest quarter since 2Q of ’03, down from 48 when compared to last year’s 3Q.
The capital markets have been drier than the Sahara Desert and many companies have simply decided to wait for more favorable market conditions. There are about 75 planned IPOs that have either been postponed or withdrawn, compared with 16 a year ago. And it doesn’t appear 4Q will be any better either.
The companies that went public during last quarter took a beating and until the market shows some stability, many companies would rather wait on the sidelines. Take GT Solar International (SOLR, $4.61, up $0.29) for instance. The stock was initially priced at $16.50 and closed at $12.59 on July 25. Raxspace Hosting (RAX, $5.69, up $0.29) went public in August and was priced at $12.50.
Some of the other companies that went public for the quarter include China Distance Education Holdings (DL, $3.51, down $0.06), China Mass Media Advertising (CMM, $4.35, down $0.09) and Energy Recovery (EPII, $5.80, up $0.30). None of these stocks look exciting at these levels but I haven’t researched any of them to see if there is potential. Stocks under $5 are risky but to be fair, these companies never had a chance. Many of them are down 50% or more from where they traded since becoming public but wheather or not it was warrented remains to be seen.