Lots of IPOs, just one Nasdaq bell
Nasdaq’s senior vice president of new listings and capital markets has some bad news for companies looking to hold an initial public offering: don’t expect to ring the opening bell.
The backlog of companies looking to list in the next few months is so big that “I’m going to disappoint a lot of people,” said Robert McCooey during an IPO panel at the Ernst & Young Strategic Growth conference. “Some people won’t even get a closing bell ceremony.” He counts 210 companies hoping to list on public markets.
It’s not just the successful IPO of Groupon last week that has changed sentiment. It’s the better — if not outright good — economic news in recent weeks, along with a solid earnings season, that is creating momentum, said David Erickson, co-head of equity capital markets at Barclays Capital. He said the firm was currently working with four companies that hoped to set IPO prices by Thanksgiving, in little more than two weeks’ time.
To hold a successful IPO that holds its value, companies should be certain they will follow up with strong quarterly earnings in the period immediately after the IPO. “You have to beat the first quarter out of the box,” he said. “If you blow up the first quarter out of the box, it takes you two quarters, three quarters, four quarters to rebuild that credibility.”
To capture the interest of the largest fund companies like FMR, companies should reach market capitalizations of at least $500 million, said Fidelity analyst Kristina Salen. Fidelity considers anything in the $500 million to $2 billion region small, she said.
The bigger the listing, the better the shot at that elusive bell-ringing slot. But there are fewer slots than you might think. Pricing a stock rarely happens on a Sunday or Monday night, McCooey said, essentially eliminating Monday and Tuesday opening bells.