NEW YORK – Soccer club Manchester Uniteds flat debut on the New York Stock Exchange on Friday ended a rocky but busy week for initial public offerings.
On Tuesday, Outback Steakhouses parent company priced its IPO below expectations, and the owner of the Carls Jr. fast-food chain postponed its planned stock offering Thursday night. It added up to an anticlimactic ending to the busiest week for major IPOs since Facebooks problem-plagued debut in May.
Investors reaction to the debuts shows they are pushing back on pricing and staying cautious if the companys finances are questionable. But if the price is right and the company is solid, investors are willing to buy.
After a five-week lull following Facebooks IPO, have been 22 initial public offerings since the last week in June. Of those, 17 are now trading above their IPO price.
The greed factor is back, said Francis Gaskins, president and editor of IPODesktop.com. But investors are being cautious about which companies to buy into, he said, adding that companies have to show a profit.
If they dont, investors wont bite, as Manchester United found on Friday. Its shares were flat at $14 in midday trading on the New York Stock Exchange, the level they were priced at by the underwriters late Thursday. The shares trade under the MANU ticker symbol. The stock had predicted the IPO to price between $16 and $20.
The sports team is the best known in the world, but its finances are less sterling. It is hundreds of millions of dollars in debt and expects to report a loss for the year ended June 30, excluding a tax credit, with revenue down 3 percent to 5 percent.
Since Facebooks debut in May, investors are increasingly demanding lower stock prices, as well. Ten of the last 11 IPOs have priced below their expected range, said Nick Einhorn, an analyst at research firm Renaissance Capital.
In the last few weeks, investors kind of in general have been somewhat cautious, he said. Theres price sensitivity.
Bloomin Brands, parent of Outback Steakhouse and other restaurants, for example, priced its offering of 16 million shares at $11 per share, below the $13 to $15 per share expected. But the stock rallied, up 17 cents at $13.66 by midday Friday, up 24 percent from its IPO price. It closed Friday at $12.86, down 4.7 percent for the day.
Another expected IPO, from Carls Jr. parent CKE Inc. on Friday was postponed. The company blamed market conditions.
Facebook shares began trading publicly on May 18 at the top of their projected IPO range, but ended up closing barely above their IPO price at $38.23 and have fallen sharply since then.
The offering was plagued with other problems too, including glitches with the Nasdaq stock market that delayed trading by half an hour. After that there was a five-week pause in IPO debuts, a Facebook freeze.