Wall Street’s version of the debutante ball — the initial public offering – is on a delay notice this week, and some newly public companies have been forced to cool their heels against the gymnasium wall until the band starts playing again.
The IPO situation is dynamic and ever-changing, but it could be that as many as 12 companies have either delayed or postponed their stock offerings indefinitely, as few firms want to make their debut into Wall Street society at a time when the place is in flames.
In short, an initial public offering enables a company to sell shares (almost always in stock) on a public stock exchange, under regulations imposed by that exchange and by federal regulatory bodies like the Securities and Exchange Commission (SEC). Companies use the proceeds from an IPO to grow their companies, i.e. fund research and development, hire employees, and invest the money on their own. Companies as diverse as LinkedIn and Groupon either have filed, or are planning to file, IPOs this year.
Proving just how volatile IPO’s can be, LinkedIn sought $3 billion in its initial offering, but saw the value of the company skyrocket to $9 billion after its first day of trading back on May 19.
Here’s a list of companies that have opted out – for now, at least – from going public.
Midland States Bancorp – Filed on May 13 but has postponed due to “adverse market conditions.’
Endure Royalty Trust – This Austin-based oil firm postponed its Aug. 10 IPO.
HomeStreet Bank – This Seattle-based bank pushed back its Aug. 11 offering due “to the difficult market.”
InvenSense – A motion processing technology firm, InvenSense has postponed its Aug. 10 IPO due to – guess what – “market conditions.”
Loyalty Alliance – A China-based marketing company, Loyalty Alliance has also suspended its Aug. 11 IPO, initially valued at $75 million.
TIMWE – This Latin American firm postponed an Aug. 12 IPO.
Trustwave – A Chicago-based data security firm, Trustwave held back on an Aug. 12 IPO.
WageWorks – A San Mateo-Calif.-based human resources firm, WageWorks indefinitely pushed back its Aug. 9 IPO.
WhiteGlove Health – A Texas-based health care services firm has delayed its Aug. 9 IPO.
Another company, Carbonite, was the “lonely IPO” last week, according to The New York Times, and with good reason. It wanted to raise $100 million in new funding, although it had to settle $62 million. But at least Carbonite did go public.
Also up in the air is the much-ballyhooed Groupon IPO, as the online discount coupon giant looks to cash in on its success. The firm is aiming for a September IPO that is supposed to raise $750 million. But a soft consumer market and some adjusted financial disclosures have opened eyes on Wall Street. While Groupon hasn’t made any official announcements about delays or postponements, and most analysts say the IPO is on track, a weak stock market is the last thing the Chicago-based outfit needs.
“Any shock to the market like the one this week is bad for anyone with IPO dreams, especially Groupon, which did not have time on its side in the best of circumstances,” notes Sucharita Mulpuru, an e-commerce analyst at Forrester Research.
That’s a bad break for Groupon and for all of the companies listed above. Until last month, the IPO market was rolling along at a good clip. According to PriceWaterhouseCoopers, the U.S. saw 79 IPOs from January through June, with $24.3 billion raised by companies. That’s way ahead of the $9.4 billion raised in the same period in 2010.
But the dog days of August have slowed things down, as at least a dozen new firms will have to settle for the wallflower role – until the bulls begin dancing on Wall Street again.