Last week, the IPO stocks of technology companies Rocket Fuel and FireEye traded close to double the price at launch on Friday, September 20, 2013.
Analysts say investors of tech stocks IPO are having a heyday with average returns of almost 34 percent. Some technology stocks have values higher than others, but hot offerings yield a whopping double in value almost instantly.
Among the advantages of initial public offering (IPO) are:
1) Correctly assessing the value of share prices of a company and
2) Benchmarking the prices of company shares for initial trading in the stock market.
After Facebook’s success, Twitter is joining the IPO bandwagon.
The IPO market is in a stirring, blockbuster revival surprising market players and investors alike. This week, thirteen companies will launch initial public trading, a scenario last seen almost six years ago, in November 2007, according to Renaissance Capital.
Investors seem to have reignited their fixation on high-yield technology stocks. Initial public offering (IPO) experienced a temporary slowdown last May following Facebook’s debut. However, the past concerns on glitch are now gone. Social networking site Facebook is currently trading comfortably higher than its IPO offering.
JOBS Act of 2012
Fueling the surge of initial public offerings is the JOBS Act, a bill President Barack Obama signed into law last year that would make it easier for startups to have their stocks publicly traded by relaxing Securities and Exchange Commission (SEC) rules on audits and disclosure’s prerequisites.
The law is an acronym for Jumpstart Our Business Startups (JOBS) Act passed by the U.S. Congress last year with widespread bipartisan support.
As provided for in the law, any startups with less than $1 billion in gross revenues annually can inform SEC of its interest in IPO. In short, it enables companies to file for IPO confidentially.
The law extends to a five-year timeframe or until startup, gross revenues reach $1 billion annually, the threshold upon which they will be asked by the SEC for audit and investor’s disclosures.
Market watchers generally agree that the JOBS Act is working.
On Twitter’s controversial move on IPO debut under the JOBS Act, many market analysts and entrepreneurs came out openly to criticize the company. Vivek Wadhwa, a techpreneur and professor at Duke and Standford business schools tweeted, “A company as big as Twitter shouldn’t be given special treatment for an IPO. JOBS Act was supposedly for small companies.”
The successes of 153 IPOs this year crunch the numbers quite convincingly. Around 200 companies are expected to go public in 2013, reliving a familiar trend in 2007.
Written by: Janet Grace Ortigas