It's been a good week generally for public companies - despite the fact that there were only four trading days, the S&P 500 just posted its best week since last July. But companies just coming to the market are having a tough time of it. The IPO market, which appeared to be heating up, took a real beating last week.
In the initial months of the year, we've seen roughly twice as many initial public offerings as at the comparable period in 2013. Ten more companies had their initial public offerings last week. All ten of them either sold fewer shares than expected or traded at a lower price than expected - or both.
Part of the problem is that more and more companies are coming to the market without showing a profit. According to Sundial Capital Research, 83 percent of the IPOs this year have been for unprofitable businesses. That's frighteningly reminiscent of the latter stages of dotcom-mania; in the first quarter of 2000, some 84 percent of all IPOs were for companies that hadn't shown a profit.
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