Other companies prepare for IPOs after Facebook's botched debut

Five companies are planning initial public offerings, even though the atmosphere still is chilly on Wall Street after Facebook's underwhelming performance.
By Ryan Faughnder and William D'Urso Published: July 15, 2012
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Nearly two months after Facebook Inc.'s botched debut chilled the outlook for initial public offerings, five companies are looking for a thaw on Wall Street.

Travel website Kayak Software Corp., software developer Palo Alto Networks Inc., guitar maker Fender Musical Instruments Corp., teen retailer Five Below Inc. and biotech company Durata Therapeutics Inc. said they are proceeding with their IPOs.

Analysts say that the shadow from Facebook's debacle continues to darken the mood for new stock issues and that the five planned IPOs don't represent a resurgence in public offerings. Facebook's stock plummeted 27 percent in the first two weeks on the market and continues to trade below its IPO price. No other company launched an IPO for five weeks after Facebook's flop.

“I wouldn't go out blowing a horn, saying the coast is clear,” said Scott Sweet, senior managing partner of IPO Boutique. “I'd love to say so, but the underwriters hurt a lot of people badly. After Facebook, there's a lot of apprehension that a lot of that nonsense could happen again.”

This year has been weak for initial public offerings. According to research firm PrivCo, total dollars raised through IPOs so far this year has fallen by nearly half compared with the same period last year, not even counting Facebook's offering.

Sam Hamadeh, the head of PrivCo, said the companies about to go public do not signal that the market is improving, especially given the modest sizes of the offerings.

“These are bite-sized, digestible IPOs,” he said. “The market cannot handle multibillion-dollar IPOs right now.”

Kayak set a price range of $22 to $25 a share for its long-delayed IPO, which could happen next week. The company originally filed in November 2010 to go public, but repeatedly held off its offering.

Palo Alto Networks announced Monday that it will offer 6.2 million shares at $34 to $37 apiece. It's expected to price the shares and make its debut next week.

Fender said it will sell 10.7 million shares at $13 to $15 each. It did not say when it would set the price and begin selling shares.

Five Below is looking to raise $135 million with shares priced at $12 to $14 each. Durata said it plans to seek almost $86 million with shares at $11 to $13 each.

None of these companies are anything like Facebook's $16-billion offering, nor do they have the same appeal for retail investors, said Brian Wieser, an analyst with Pivotal Research Group. The real test would be if there were another jumbo IPO like Facebook, he said.

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I wouldn't go out blowing a horn, saying the coast is clear. I'd love to say so, but the underwriters hurt a lot of people badly. After Facebook, there's a lot of apprehension that a lot of that nonsense could happen again.”

Scott Sweet

Senior managing partner of IPO Boutique

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