Investors still rattled following Facebook’s botched IPO
Companies intent on following Facebook’s lead and pursuing the public sale of their shares are still cowering behind the couch following the comedy of errors which accompanied Facebook’s own IPO bodge job.
Facebook is still languishing some 18% below its mid-May IPO price, turning off investors from parting with their cash on other fledgling firms.
Since then figures from Renaissance Capital suggest that the number of IPOs dropped 33% in the second quarter from the same period in 2011 with just 11 IPOs backed by venture capitalists completed in the second quarter, down an even more precipitous 50% over the same period.
This is despite heavy discounting in which 45% of IPOs were priced below their IPO prices, the fiercest bout of price cutting since the third quarter of 2010.
In addition, once Facebook is removed from the equation, the value raised by remaining companies in the quarter is also thought to be down 50%. According to Lee Simmons, an analyst at Dun & Bradstreet, this is because Facebook has “created a drag effect for the rest of the industry and the other companies looking to get out of the gale.”