DealZone

First day pop doesn’t guarantee longer term success

digitalglobeThursday’s IPO by satellite image maker DigitalGlobe was the fifth in row to surge in its first day of trading, rising 13 percent in another sign of the IPO market turning around. But a first day pop does not necessarily guarantee long-term success.

Just take a look at the other IPOs this year, with their respective first day pops:

- Mead Johnson, 10 percent (Feb. 11) (pediatrics nutrition)
- Changyou.com, 25 percent (April 2) (online video games)
- Bridgepoint Education Inc, 5.7 percent (April 15) (online college operator)
- Rosetta Stone, 40 percent (April 16) (language training software)

Bridgepoint is now trading below its offer price of $10.50, which was below the estimate range in the first place.

Rosetta Stone, which wowed the markets last month with the best first day performance in a year, forecast a loss earlier this week and its shares are now 31.5 percent down from their all-time high hit last week.

Disappointing Bridgepoint IPO brings glimmer of hope to VCs

Putting cold water on the idea that the IPO market was beginning to move past its doldrums, at least for fast growing companies, Bridgepoint Education‘s IPO priced 30 percent below expectations Tuesday night, going for $10.50 per share, a far cry from the $14-$16 range the college operator had hoped for.

Bridgepoint broke a short-lived two-IPO streak that saw Mead Johnson Nutrition Co and Changyou.com price at the top of their ranges and soar in their market debuts. And that was despite Bridgepoint’s enviable 150 percent revenue growth in 2008.

Still, Bridgepoint’s IPO brought some hope to venture capitalists, who have had to contend with a 90 percent drop in VC-backed IPOs in 2008, and are looking for an exit for their portfolio companies. Owned primarily by Warburg Pincus, Bridgepoint is the first venture-capital backed IPO since web hosting company Rackspace Hosting’s $187.5 million IPO in August 2008, according to Thomson Reuters.

U.S. still a draw for foreign IPOs

nasdaq11Stock exchanges in emerging markets have grown more sophisticated in recent years, giving Nasdaq and the New York Stock Exchange a run for their money in attracting new overseas IPO listings.

Yet last week, Chinese video games maker Changyou.com, made a spectacular debut on the Nasdaq, and on Monday, Israeli tech company N-trig, which makes pen and touch devices for notebook computers, said it was planning a Nasdaq listing in 2010.

But why would Changyou.com, for example, with virtually no sales to speak of in the U.S., list there, rather than on a Chinese exchange?

Après le Changyou IPO, le déluge?

umbrella2Well maybe not yet, but it was a good week for IPOs, with hopeful signs the market is beginning to awaken from its long slumber.

Thursday’s IPO by Chinese video games maker Changyou.com had a first day “pop” of 25 percent, the strongest debut in a year, making it the third IPO in a row, after Mead Johnson in February and Grand Canyon in November, to do well.

Two more companies, language instruction provider Rosetta Stone and Bridgepoint Education, apparently buoyed by all the advance buzz around Changyou, scheduled their IPOs for pricing in two weeks.