IPO Fireworks Before The 4th

Includes: NOW
by: IPOScoop

The IPO market closed out 2012's first half with a bang. On Friday - the final trading day of the six-month period - ServiceNow (NYSE:NOW), a cloud-computer company, scored a gain of 36.7 percent in its debut on the New York Stock Exchange. (More on that later.) ServiceNow was one of four IPOs to hit the launching pad during the final week of June. All finished in the winner's circle - a fitting coda just before the IPO market's Fourth of July break.

The IPO market's performance for the first six months of 2012 was not nearly as bad as some would have you believe. To get the real story, all you have to do is look at the U.S Securities and Exchange Commission filings.

From January through June, the new-issues calendar produced 74 IPOs, excluding unit offerings. They raised $28.4 billion. The Facebook (NASDAQ:FB) IPO train wreck accounted for $16 billion of that total.

2012 6-month IPO Scorecard:

(As of June 29, 2012)

Priced: 74

Up: 47

Down: 26

Unchanged: 1

Percentage gain: 14.06 percent

Nasdaq Composite Index: Up 12.66 percent

Now let's take a look at last year's first half.

The 2011 calendar produced 76 IPOs, excluding unit offerings. They raised $26.1 billion.

2011 6-month IPO Scorecard:

(As of June 30, 2011)

Priced: 76

Up: 44

Down: 31

Unchanged: 1

Percentage gain: 14.98 percent

Nasdaq Composite Index: Up 4.55 percent

The 2012 comparison with last year is not too shabby. What hurt 2012's IPO market was a dry spell that ran from May 11 through June 27. During that six-week period, one IPO got priced - Facebook - and three others were postponed.

Worth noting: The slowdown had nothing to do with the Facebook offering. The cause of a vanishing IPO market was "due to market conditions."

Historical data shows that when the stock market sells off, IPO traffic dries up. That's what happened during 2012's first half. The Nasdaq Composite Index, the barometer of the IPO market, took a 10-week slide. From March 26 through June 1, the Nasdaq lost 12 percent. On March 26, the Nasdaq closed at its 2012 high at 3,122.57; on June 1, it closed at its recent closing low at 2,747.48. Then things got better. By June 29, the Nasdaq had recovered 6.83 percent to close at 2,935.05. And the IPO calendar came into play.

Sunshine from the Cloud

ServiceNow priced its IPO of 11.7 million shares at $18 each on Thursday evening, June 28. That was above its $15 to $17 per share. The deal closed Friday at $24.60, UP 36.7 percent from its initial offering price. ServiceNow is a San Diego, California-based provider of cloud-based services - a hot sector in 2012's IPO market. There are more in the pipeline.

Cloud coming attractions:

  • E2open (NASDAQ:EOPN), a Foster City, California-based provider of cloud-based, on-demand software solutions, filed for an IPO to raise $86.3 million on Feb. 17, 2012.
  • Palo Alto Networks (tba) a Santa Clara, California-based provider of the next generation of network security that allows enterprises, service providers, and government entities to secure their networks, filed for an IPO to raise $175 million on April 6, 2012.
  • Reval Holdings (tba), a New York City-based SaaS provider of integrated treasury and risk-management solutions offering cloud-based software and related offerings, filed for an IPO to raise $75 million on March 30, 2012.

But don't expect anything to happen this week - nothing does during the July 4th Holiday break.

Stay tuned.

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

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