The year's last batch of IPOs has gone out, leaving a cloudy forecast for 2012.
One of 2011's most anticipated new issues, online gaming firm Zynga (NASDAQ:ZNGA - 新聞), priced well Dec. 15 but quickly headed south. A passel of energy IPOs were received tepidly despite the sector's strength.
"What happened doesn't necessarily give confidence in companies that are wanting to go public," said Manoj George, CEO of outsourcing firm Nair & Co. and CFO of Red Hat (NYSE:RHT - 新聞) during its IPO. "I've talked to a couple of companies who have the fundamentals to go public, (but) they are looking at 2013 as opposed to 2012.
The news wasn't all bad. Demand for Michael Kors (NYSE:KORS - 新聞) was so strong that the fashion house jacked up its IPO size by more than 25% and still rose Dec. 14 in its first day of trading. And while Zynga's debut was underwhelming, tiny Jive Software (NASDAQ:JIVE - 新聞) also upped its IPO size. That suggested cloud computing is still hot, even where it's unprofitable.
Yet overall, it was a tough year from the investor's standpoint. According to IPO research house Renaissance Capital, 125 companies went public on U.S. markets vs. 154 in 2010. The average return on the IPO price was -12%.
The year's top new issue is data security company Imperva (NYSE:IMPV - 新聞), up 81% from its Nov. 8 IPO at 18. Nutrition store chain GNC Holdings (NYSE:GNC - 新聞) has climbed 79% from its March 31 IPO at 16.
Renaissance blames Europe's debt crisis for much of this trouble, and it's not hard to see why. The early-August market panic led to a two-month stretch of no new issues, the longest span since the bottom of the recession. The U.S. IPO market has remained at the mercy of the global economy.
"It's very uncertain, given how Zynga and others performed," said Lee Simmons, IPO expert with Dun & Bradstreet. "Any company considering going public in Q1 is really going to have to consider wider economic conditions before going out of the gates.
But for companies who do complete IPOs, times are getting more lucrative, PricewaterhouseCoopers noted. In 2010, some 40% of all U.S. IPO proceeds came from one deal — General Motors (NYSE:GM - 新聞) — with the rest averaging an anemic $150 million. Excluding GM, proceeds in 2011 were up 53% to $35.4 billion.
"A number of blockbuster IPOs in the last few weeks of 2011 has sparked a renewed confidence in the U.S. IPO market, which bodes well for 2012," Henri Leveque, leader of PwC's U.S. Capital Markets Services, said in a statement.
Another factor behind the overall declining IPO count was a fall in foreign issues, PwC noted. In 2010, China seemed to be invading U.S. markets with IPOs that enjoyed huge first-day pops. That continued in early 2011, but a backlash set in as many Chinese stocks bombed in the aftermarket. In Q4, just four of 28 IPOs came from abroad.
Some interesting deals are in the pipeline. Online directory Yelp and travel broker Kayak Software lead the Internet offerings. On the retail side, the long-awaited IPO of Toys R Us is still idling its engines. Auto and mortgage lender Ally Financial could raise $5 billion. But one name is being watched above all others.
"All eyes are on Facebook," Simmons said. "The big rumor now is an April filing. I think social media has been heralded as the great white hope."