Monday, January 22, 2018

Burst of IPOs follows gains in stock market

The stock market has been heating up, driving demand for IPOs.

There have been 140 initial public offerings of stock this year, up 46 percent from the same time in 2012, according to IPO tracking firm Renaissance Capital. Of the eight companies that went public this week, two — cybersecurity software maker FireEye and technology advertising company RocketFuel — nearly doubled in value Friday.

The pace does not appear to be slowing down. Next week, market watchers expect as many as 13 more companies to make their debuts.

If all of them price, it will be the most IPOs in the United States in one week since 2007, when 14 hit the market at once, according to data provider Dealogic.

With the stock market hitting new highs, investors want to take chances they might not otherwise take in a flat or down market, said Scott Sweet, senior managing partner at IPO Boutique, which researches and invests in IPOs.

The Standard & Poor's 500 index, a broad gauge of the stock market, has risen nearly 5 percent this month.

If that holds, it would be the index's best monthly performance since January. Even with Friday's decline, stocks are near all-time highs set earlier this week.

How many companies are going public and how much money they're raising reflects investors' confidence and taste for taking risks. A rising stock market can make investors feel more optimistic about the general business climate and more eager to take a chance. Companies can grow quickly after an IPO, adding jobs and making investments with the new cash that can help buoy the economy.

The success of some prominent IPOs in recent years, such as Michael Kors Holding Ltd., has also helped increase investors' appetite, said Josef Schuster, an IPO analyst. Michael Kors stock is worth almost four times as much as its $20 offering price in December 2011. And more are coming.

Social media company Twitter intends to go public. Real estate brokerage Re/Max Holdings Inc. hopes to raise as much as $210 million — above the $100 million projected in August, when the company filed plans to become public. That suggests strong demand for widely recognized brands.

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