With many companies ready to list their shares on the New York Stock Exchange and Nasdaq, 2012 could be known as the year of the IPO.
The IPO market showed a sign of revival in 2011, with technology companies such as Zynga, Groupon, Pandora Media, and LinkedIn making their trading debuts. No wonder, with technology companies driving the IPO market in the U.S, Facebook is set to debut trading in the first half of 2012.
Investors have shown a strong appetite for investing in new companies and are willing to take risks with new stocks that have potential to make it big in their respective sectors. The uptick in risk appetite is also a good sign for the overall market amid a slow recovery in the economy.
Recent IPOs have done well due to their relatively small size, with a majority in the $500 million range. Additionally, many companies cut their price ranges, making valuations more attractive to investors.
A report from Ernst & Young says that in terms of pricing, 81 percent of global IPOs in the quarter priced within or above their initial filing range, while just 7 percent of IPOs are priced below their initial filling range.
This week is one of the busiest IPO weeks in the U.S since December 2010. Annie's, Regional Management and Vocera Communications made their debuts in the public market on Wednesday. Millennial Media shares debuted on Thursday, with GasLog and Enphase Energy making their debuts on Friday.
A majority of the recent companies debuting on the NYSE and Nasdaq have been greeted with a phenomenal response from investors, sending their shares up more than its pricing range, implying improved trading environment for IPOs.
Mobile advertising firm Millennial Media (NYSE:MM) got a phenomenal response from investors on its trading debut, soaring 92 percent to $27.90 on Thursday. This is the highest rise of a debut stock since LinkedIn Corp. (NASDAQ:LNKD) rose 109 percent in May 2011.
Shares of California-based Annie's (NYSE:BNNY) debuted today on the New York Stock Exchange and got an overwhelming response as its stock surged 92 percent in its first trading day.
E-commerce site CafePress (NASDAQ:PRSS), which raised $86 million by offering 4.5 million shares at $19, above the estimated range of $16 to $18 per share.