With new public stock offerings for guitar maker Fender and travel booking website Kayak on deck next week, there are signs demand is starting to grow for IPOs after a five-week freeze triggered by a steep decline in financial markets and exacerbated by Facebook’s rocky May 18 debut.
Five companies are scheduled to go public next week alone, including Fender, Kayak, and Palo Alto Networks, a maker of computer network security products. After Facebook, just four deals made it to market by the end of June, marking the longest stretch without an initial public offering of stock since August-October 2011. Stocks sank then in the wake of the US debt limit showdown and a deepening European financial crisis. The resurgence now is a welcome indication that dealmakers are regaining confidence about raising money through IPOs.
But the situation is far from rosy. There are 68 companies expected to raise $14.4 billion through IPOs later this year, according to research firm Dealogic. Last year at this time there were almost double that amount of companies — 135, looking to raise $23.6 billion.
‘‘If the market stays healthy — the overall market — I think we will see a lot of IPO activity in the second half,’’ said Nick Einhorn, an analyst with Renaissance Capital.
The types of companies that try to raise money will also affect the IPO market. Mutual funds and the other big investors who tend to buy IPO shares are less likely now to be attracted to technology companies like social networks and games maker Zynga Inc. They’ve shifted to business technology companies such as Palo Alto Networks, which they consider more stable.
Several consumer-oriented deals could ignite excitement later this year, said Morningstar analyst James Krapfel, citing Bloomin’ Brands Inc., the owner of Outback Steakhouse; English professional soccer club Manchester United; and Coty Inc., maker of OPI nail polish and Jennifer Lopez perfume.
But even companies in industries considered appealing will have a hard time if the broader markets don’t cooperate. Fears about the faltering global economy stalled the IPO market in May, when economic worries drove the Standard & Poor’s 500 down 6.3 percent.
And then there’s the memory of Facebook’s disappointing debut. The stock was expected to take off and ignite investor demand for other IPOs. Instead, it closed up just 23 cents from its IPO price of $38 on its first day of trading. The stock has fallen about 19 percent since then and now trades around $31.
On the plus side, investors may take heart from a spurt of IPO activity at the end of last quarter. The stocks of all four companies that went public in the last week of June are trading at or above their IPO price.Barbara Ortutay writes for the Associated Press.