Two technology IPOs nearly doubled in their Friday debuts as investors remain hungry for fast-growing companies.
Ad tech firm Rocket Fuel (FUEL) leapt 93% to 56.10 after pricing at 29 a share, the top of its recently raised price range.
Cybersecurity firm FireEye (FEYE) spiked 80% to 36 after pricing at 20, above the expected range.
"Both of these companies have revenue growth above 100%, and that is like putting honey out for bees," said Francis Gaskins, founder of IPOdesktop.com.
Rocket Fuel and FireEye had the fourth- and fifth-best IPO debuts this year, just behind Benefitfocus (BNFT), which shot up 102% in Wednesday's launch.
The three IPOs hail from in-demand sectors — software-as-a-service category (Benefitfocus), Big Data analytics (Rocket Fuel) and network security (FireEye).
"The software-as-a-service space is perhaps the hottest area," said Linda Killian of Renaissance Capital, an IPO investment and research firm.
Benefitfocus' cloud-based SaaS system helps employers and insurance carriers manage health care and insurance benefit plans.
Cvent (CVT), an SaaS provider of event planning and management services, is up 85.5% since its early August IPO.
Cloud-based SaaS, first made popular by Salesforce (CRM), helps companies save time and money by subscribing on a monthly basis rather than owning and maintaining the systems and software.
Among investors, fast growth takes priority over profit. FireEye revenue rose 107% to $61.6 million in the first half of 2013. But it lost a net $67.1 million, as it spent $90 million on research, product development, marketing and sales.
"The scale of opportunity is very large and we needed to catch up to the opportunity rather than getting into it in an incremental fashion," Ashar Aziz, founder and chief technology officer of FireEye, told IBD.
There have been 140 IPOs so far this year, exceeding 2012's total of 128. They've raised $30 billion.
By year-end, new issues could top 200, which would be the most since at least 2007.
Some 115 companies are registered for an IPO. That excludes confidential filings, which Renaissance Capital has estimated could be as many as 75.
Twitter recently disclosed that it has filed to go public, as social media firms continue to boom. LinkedIn (LNKD) shares have more than doubled this year. Facebook (FB) has also recovered from its 2012 IPO woes and now trades at a record high.
The rising tide has not lifted all IPO boats, though.
ClubCorp (MYCC) rose 3.5% to 14.50 in Friday's debut. But shares priced at 14, below forecasts. The operator of 152 golf, alumni and other clubs turned a profit in Q2, but sales rose just 5%.
"Investors are looking for high growth, and if a company doesn't have that, they need to have a strong valuation and a good story," Killian said.
- Rocket Fuel