New stats confirm that the Facebook (FB) IPO debacle has frozen the market for new IPOs after a strong start for new IPOs in 2012. According to data provided by PriceWaterhouseCoopers as part of their IPO Watch service, in Q1 2012 there were 44 IPOs, or an average of 14 per month. The second quarter started off just as strong, with 27 IPOs from April 1 through the middle of May, or an average of 18 per month.
But then came Facebook on May 18. I have documented previously much of what went wrong that day, and also covered much of the damage that had been done, including predicting that the IPO market had been destroyed. Now it has been confirmed: Instead of the three to fiev new IPOs per week averaged over the last 18 months, no new IPOs have gone to market since May 18.
Why? Paul Bard of Renaissance Capital explained it this way:
There has been a near perfect storm hovering over the IPO market driven by regulatory uncertainty following the Facebook debacle, investors that on average have lost money on recent deals, and ongoing global market uncertainty. This has put a significant damper on investors' appetite for risk and will likely result in a very slow period for IPO issuance in the near term.
Very few in the industry want to discuss it out loud, but the companies that registered for IPO before May 18 and since then are now on hold until this Facebook mess can be cleaned up, or at least becomes a fading memory. At this point, most institutional and retail investors want no part of an IPO, especially a tech IPO, after seeing all the manipulation and bungling that happened with Facebook.
When will this turn around? It's hard to say, as the reputation of Nasdaq, the investment bankers, the underwriters, the market makers, the insiders, and everyone else involved with the Facebook IPO has been severely damaged. Investigations on how it all happened are continuing -- what restitution should be provided to Facebook investors, what happened to the $240 million that disappeared in the first 30 seconds of trading, why the confirmation and trading system broke down, and a whole host of other issues that have been documented on Seeking Alpha and elsewhere. Until these investigations are completed and corrective action is taken, consider the IPO market closed for repairs.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.