NEW YORK – It’s been a month since Facebook’s IPO fell flat and in that time, the market for initial public offerings has collapsed.
No company has gone public since May 18, compared with 19 in the same period a year ago. Fourteen offerings have been withdrawn or delayed, according to Dealogic.
There were no public offerings scheduled for last week. Of course, thanks to the European debt crisis, financial markets haven’t been terribly conducive to IPOs.
Still, venture capitalists say the fallout from Facebook’s rocky IPO is making companies – especially those in the technology sector – cautious about going public.
“It pretty much wiped the counter clean for the time being,” says Francis Gaskins, president of researcher IPOdesktop. “It sucked the air out of the room.”
It wasn’t supposed to be this way.
The Internet industry that captivated the investment world in the late 1990s and went bust as the next decade began had pinned its hopes on Facebook’s stock market debut to signify the beginning of a new era. In Silicon Valley, the IPO had been billed as “the big one,” an earth-shaking event that would unleash a wave of investment in technology startups.
Instead, from the first-day-pop-that-wasn’t to the investor lawsuits and falling share prices that followed, Facebook’s $16 billion initial public offering has resulted in nothing but trepidation among tech entrepreneurs and those who supply their early funding.
“There were a lot of venture capitalists and entrepreneurs that really have been waiting for Facebook to go public,” says Sam Hamadeh, the CEO of PrivCo, a research firm that follows privately held companies. “Everybody’s been told just wait til May 18, Facebook is going to pop, everybody will get very excited about it … and then you have the opportunity to go public this summer with that halo effect.”
That bright, glowing aura never materialized. After pricing at $38 the night before its market debut, Facebook’s stock shot as high as $45 before settling at $38.23 at the end of its first trading day. Since then, the stock dropped as low as $25.52.
On Friday, it closed at $33.05.
