Marshall Hargrave: Wall Street is still a big fan of IPOs. In many cases it’s a vicious circle of moneymaking that retail investors shouldn’t be left out of.
Last year, 75% of IPOs finished up by year’s end. That includes all IPOs, and not just the “hottest” ones.
That statistic is even more mind boggling when you just focus on the hottest IPOs. Some of the highest-profile IPOs so far this year have dwarfed the returns of the overall market.
Back in April we covered the top 10 upcoming IPOs for 2014. Let’s do a quick recap.
Revisiting the Top IPOs of 2014
Alibaba Group Holding (NYSE:BABA) is up nearly 30% since it went public to much fanfare a month ago. Labeled the Chinese Amazon.com (NASDAQ: AMZN), Alibaba’s IPO was the largest in history.
Activist investor Starboard thinks that the market is undervaluing Yahoo’s stakes in Alibaba and Yahoo Japan. But it remains to be seen what major owners of Alibaba, Softbank and Yahoo (NASDAQ: YHOO), have planned for the massive profits they made in the Alibaba IPO.
Another IPO we featured earlier this year, TrueCar (NASDAQ: TRUE), is up 120% since its May IPO. We noted that TrueCar was more of a tech company than a car dealer. Regardless, it has still benefited from the strengthening auto industry.
But not all stocks made it to market.
Box had filed for an IPO in early 2014, but it decided to delay its IPO until 2015 given the market volatility. And top peer Dropbox was rumored to be one of the top tech IPOs of 2014. But with the likes of Amazon,Google (NASDAQ: GOOG) and Microsoft (NASDAQ: MSFT) all active in the cloud storage business, it has been increasingly difficult to get an IPO done in the cloud space.
Technology changes quickly. Square was a leader in the mobile payments space, but now Apple has launched Apple Pay and eBay (NASDAQ: EBAY) is spinning off PayPal. This puts more pressure on Square, which was founded by Twitter co-founder Jack Dorsey. What’s more is that Square raised another round of financing just this month, which should delay its IPO until 2015.
The talk of a Spotify IPO has also grown quiet of late. This comes as top rival Pandora (NYSE: P) is down 15% over the last three months and Apple (NASDAQ: AAPL) spent $3 billion for Beats Electronics — which strengthens its music-streaming offering. However, the one bright spot is that Spotify generates the majority of its revenues from music subscriptions, while Pandora relies on advertising.