The IPO Buzz: IPO Fiction Vs. Fact

 |  Includes: GRPN, WGH
by: IPOScoop

Will Rogers was fond of saying, “All I know is what I read in the papers.” He didn’t have the Internet to check fiction versus fact. This past week, we were subjected to an IPO media blitz about Groupon (NASDAQ:GRPN) and Facebook. In the jaded eye of the Wall Street professional, it was fiction.

Go to the Internet, open the U.S. Securities and Exchange Commission (SEC) filing window and you’ll find the official information on any IPO. That’s known as fact. Let’s take Groupon and Facebook.

On June 2, 2011, Groupon filed for an IPO to raise $750 million. The SEC EDGAR Search Results page can be found by clicking here. Scroll down and you’ll find the S-1 filing.

Since then, there have been two amendments (S-1/A) filed. One was dated July 14th, when more underwriters were added, and the latest was filed on Aug. 10, updating its financials to the six months ended on June 30 from the three months ended on March 31.

As of Friday, Sept. 16, this is all anyone knows or can say about the Groupon IPO.

Given the nature of the SEC, there will be more S-1/A filings until that fateful day when Groupon posts the number of shares it expects to offer and at what price range.

That’s show time, baby.

Then you can expect the road show to start and a pricing date to be set.

Until that happens, Mr. Rogers, whatever the financial media prints is fiction.

Turning To Facebook

The Facebook IPO story is straightforward. On Friday, Sept. 16, there was no SEC filing.

That’s fact, Mr. Rogers.

Let’s take another look at things through the jaded eye of the Wall Street professional.

Just because a company files to go public doesn’t mean the deal will get out the door. Cases in point are the last two companies that filed to withdraw their IPO plans. They were BlueArc and Prometheus.

On June 24, 2011, BlueArc, a San Jose, California,-based provider of network storage systems, filed for an IPO to raise $100 million. On Sept. 16, BlueArc withdrew its registration. The company was acquired by Hitachi Data Systems.

End of story.

On Dec. 19, 2007, Prometheus, a San Diego-based specialty pharmaceutical company, filed for an IPO to raise $100 million. On Sept. 7, 2011 - almost four years later - Prometheus withdrew its registration. The company was acquired by Nestle Health Science S.A., a wholly owned subsidiary of Nestle S.A. (NSGRY.PK).

End of story.


The jaded-eye set -- aka the Wall Street professionals -- do not get excited over early filings. What catches their interest is the S-1/A filing stating expected pricing terms.

And sometimes that doesn’t happen. Let’s take last week’s expected offering.

WhiteGlove Health (WGH), an Austin, Texas-based provider of medical care, didn’t get out the door. By Friday afternoon, the expected offering price was slashed to $6 to $9 per share down from $9 to $13 per share. The company still plans to offer 2.5 million shares.

The IPO is now expected to be priced during the week of Sept. 19 and to trade on the NYSE Amex under the proposed symbol “WGH.” Joint-lead managers are WR Hambrecht + Co. and Rodman & Renshaw.

Stay tuned.

Disclosure: Neither the author nor anyone else on the staff has a position in any stocks mentioned, nor do they trade or invest in IPOs. The author and staff do not issue advice, recommendations or opinions.