The 2011 IPO Class: If You're Late To The Party, Don't Bother Showing Up

by: Bill Maurer

Time after time, new companies come to the market. It's big news for the company, and in many cases, big market news for a specific industry or country.

Last week, I reported on the dismal post-IPO performance of some hyped international IPOs that have started trading within the past year. Today, I'm going to look at six big U.S. names that have come to the market since, and one that came earlier but is a comparable name. Again, the regular, small investor has lost. If you couldn't get into these IPOs before they went public, it would have been a good idea to just stay away. Unfortunately, many people don't see the danger, and that is extremely costly. Here's how the names have done, since both the IPO dates and high points.

Name Current IPO Date IPO Price Change High Change
LinkedIn (NYSE:LNKD) $60.00 5/9/11 $45.00 33.33% $122.70 -51.10%
Groupon (NASDAQ:GRPN) $15.24 11/4/11 $20.00 -23.80% $31.14 -51.06%
Pandora (NYSE:P) $10.52 6/15/11 $16.00 -34.25% $26.00 -59.54%
Zillow (NASDAQ:Z) $22.72 7/20/11 $20.00 13.60% $60.00 -62.13%
Angie's List (NASDAQ:ANGI) $13.00 11/17/11 $13.00 0.00% $18.75 -30.67%
Opentable (NASDAQ:OPEN) $32.38 5/22/09 $20.00 61.90% $118.66 -72.71%
HCA Holdings (NYSE:HCA) $23.77 3/10/11 $30.00 -20.77% $35.37 -32.80%
Click to enlarge

Let's first take a look at LinkedIn, the professional networking site. The 33% performance since the IPO is misleading because the stock opened for trading at $83 and traded in a range of $80 to $122.70 that day. If you bought then and are still holding shares, you are down anywhere from 25% to 50%. The stock has not done well, as many thought it was overpriced early because there was a low amount of shares floated. Unfortunately, insiders too have felt some of these losses, as the insider lockup expired only a week ago. Anyone wanting to sell shares for more than $90 or $100 was lucky if they got $70. Although the basis for those shares is low and they did make a killing, there was still plenty of money left on the table. They made money, while anyone who got in after the IPO has probably lost money.

Groupon has actually done the worst of these seven. The stock has lost 24% from its IPO price, and that was just 24 days ago. More so, it has lost 51% from its highest price. In 15 full days as a publicly traded company, Groupon's stock has been up just three times, just 20%. To be fair, we haven't had the best market action lately, but still, Groupon shares plunged 9% on Monday, a day when global markets saw at least 2-3% rises each. The analysts that gave the stock buy ratings when it was at $25 have seen a 40% loss. Will they change their rating now? Probably not.

Pandora shares had been holding up OK until the last couple of weeks, but I think the name was doomed after it fell nearly 24% on its first full day of trading (second actual day). Like many other "hit" names this year, Pandora's shares hit their high point on their first day of trading, and have not seen that level ever since. Most analysts seem to like the name, but the company is still forecasted to lose money this fiscal year (ending January 2012) and next. Revenue growth is forecasted to be tremendous, but if you can't deliver on the bottom line, you won't last forever.

Of the names that started trading in 2011, only Zillow is above its IPO price. Now, some may look at the chart and my numbers and think that $60 is wrong, but the stock did open for trading at $57.01 and hit a high of $60 that day. It just wasn't for very long. After that day, the company's high trade is $39, which, like many others, happens to have been on the second day of trading. Zillow has lost a third of its market cap in the past 3.5 weeks. But unlike some others, it is profitable, so the growing revenues will be seen a bit on the bottom line. I use the website a lot, and I think it is great.

After seven days of trading, Angie's List is right at its IPO price. It fell 3.7% yesterday despite the huge market rally. Of the seven names I've mentioned, it has the smallest fall from its high, but like I said, it has only traded for seven days. If the stock performs like some of the other recent IPOs, we could see single digits by the end of the year. That is not what current shareholders want to hear.

OpenTable did not go public in 2011, but its performance over the last few months has mirrored those who have. At the end of April, just before the LinkedIn IPO, this name was well over $110. It was still in the mid $90s when LinkedIn started trading. But it has been downhill since then, losing nearly two thirds of its value. In its latest quarter, EPS numbers were in-line, well below the 50%, 21.7% and 22.2% blowouts of the three quarters before that. Analysts have cut EPS numbers by 4% over the past three months for this year, and next year's estimates have been cut by 14% over that time. The stock is still up nicely from its IPO price, but you've lost money if you got into the name anytime after March of 2010.

Finally, HCA Holdings shows what happens when your earnings report stinks. The stock held up nicely during its first four months of trading, but lost nearly half its value toward the end of July/beginning of August. An EPS miss of 9 cents was one of the culprits. The stock has rebounded from its $17 to $18 lows, but is still down from its IPO price and off 32.8% from its high. Analysts have raised EPS estimates for this year and next over the past few months, so maybe the name has put in a bottom. Like many others before it, this name had one bad quarter and paid for it.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.