The U.S. initial public offering market saw significant increases in the third quarter, which is good news for companies thinking about going public.
The big question is: why aren’t there more technology IPOs?
According to Bloomberg Law data, 101 IPOs priced in the first three quarters of the year, an 87 percent increase over the 54 that priced in the first two quarters. The total value of the IPOs for the three quarters was $17.3 billion, about a 90 percent increase from the $9.1 billion for the first two quarters.
Of the companies that became publicly traded in the U.S. so far this year, only 20 are tech companies. These issuers raised a total of $2.5 billion, compared to the $4.2 billion that tech companies raised in the first three quarters of 2015.
There are many reasons why tech companies delay going public. Unlike pharmaceutical or biotechnology companies, tech concerns—especially the unicorns (private startups valued at more than $1 billion)—often have no trouble accessing cash. Pharmaceutical and life sciences companies also are more likely to do deals in a down market, because of their ongoing need to fund research and medical trials.
That said, things may be looking up for tech IPOs. One encouraging sign is that in late September, the IPO from San Jose, Calif.-based software company Nutanix Inc. traded 131.25 percent above its offer price on the first day of trading, raising almost $238 million.
Another is that image messaging firm Snap Inc. is planning an IPO that could come as early as March next year. The Venice, Calif.-based company—which owns Snapchat and video-equipped sunglasses known as “Spectacles”—was valued at $18 billion in its latest funding round. Some observers are predicting that Snap’s IPO could be one of the biggest of the year.
So 2017 may be an exciting year for tech IPOs. Stay tuned.
Check out my story, U.S. IPO Market Recovers Somewhat but Still Lags Prior Years, for more on the state of the IPO market in 2016.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)