Today saw the 100th IPO of 2014, bringing the total up to 102. Yet over half of these are now trading below their IPO price. Today's IPOs continued a pattern of poor trading that has plagued the IPO market since mid-March. The four fell 0.2% on average with a 9% discount below the midpoint. The Chinese security app developer Cheetah Mobile (CMCM) was the day's best performer, pricing above the midpoint and trading up nearly 1%. GasLog Partners (GLOP), which began trading on Wednesday, fared better with a 24% pop. However, not every company offers a 7%+ yield.
11 IPOs priced in the last three weeks and have come to market with average discount of 20% below the midpoint and an average first day pop of -3%. Six traded down on the day of their IPO. Up until 3 weeks ago, the average first day return had been 17% year-to-date. Aftermarket returns have also suffered. At quarter-end, the year's average IPO traded up about 7% after its first day. That number is now -8% YTD, meaning IPO investors are not making money on the day of the offering, nor in the aftermarket.
The broader market's impressive rally during 2013 likely contributed to this year's record number of IPOs and initial filings unseen since 2000. However, IPO returns must swing positive or investors will be hard to find.
| IPOs on 5/8/14 | ||||
| Company (Ticker) | Description | Deal Size ($mm) | Offer Price vs Midpoint | First Day Return |
| Cheetah Mobile (CMCM) | Chinese mobile security apps | $168 | 4% | 0.7% |
| Alder Biopharmaceuticals (ALDR) | Migraine biotech | $80 | -29% | 0.3% |
| K2M Group Holdings (KTWO) | Spinal surgery devices | $132 | -12% | 0% |
| Dorian LPG (LPG) | Liquefied petroleum gas carriers | $135 | 0% | -1.9% |
| Average | $129 | -10% | -0.2% | |
For a look at post-IPO performance, the Renaissance IPO ETF (symbol: IPO) serves as a cap-weighted basket of newly public companies. In the past 30 days, it has traded down 3.7%, compared with -4.1% for the Russell 2000.
