Nearly 15 years ago, the NASDAQ Composite closed at an all-time high of 5,048 as investors famously threw stacks of money at tech stocks during the dot-com bubble.
With the NASDAQ nearing its all-time high, some have wondered whether we've gone back to that bubble. However, the IPO market is far from those euphoric levels.
Tech companies in 1999 and 2000 typically went public well above the proposed valuation and proceeded to nearly double from that offer price. In 1999 there were 111 tech IPOs that traded up at least 100% on the first day, compared to just 2 last year (CSLT, VRNS). In 2014, we saw far fewer tech IPOs. Those that did go public received lower initial demand even as a greater proportion were profitable.
Instead of a tech bubble, we see warnings of a biotech bubble. There were about 50% more development-stage biotech and biomedical IPOs in 2014 compared to 2000. None of these companies have operating earnings yet the group has outperformed all other industries.
The largest recent tech IPOs by market cap, including Alibaba (BABA), Twitter (TWTR) and Tableau Software (DATA), are held by Renaissance Capital's IPO-focused ETF.
