IPO market stuck in second-longest drought ever

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Initial public offerings are at a standstill in the U.S.

There have been no IPOs on the New York Stock Exchange since Dec. 18, when financial technology company Yirendai went public, marking the second-longest drought in the exchange’s history, according to Dealogic, a New York-based financial services firm.

The last time the NYSE encountered a similar drought was during the financial crisis, when there were only two offerings from Aug. 7, 2008, until Feb. 10, 2009.

“You look at the whole stock market, and it’s moving back to a more value-oriented [mentality] from a more growth-oriented mentality,” Kim Forrest, senior equity analyst at Fort Pitt Capital, said in a phone interview. “I think that change could make people pull their IPOs till later.”

Last year’s best-performing stocks in the S&P 500, Netflix and Amazon — both considered growth names — have seen their stock fall sharply in 2016.

Netflix’s shares are down more than 12 percent year to date, and Amazon’s have fallen more than 16 percent. Both stocks more than doubled in 2015.

Nonetheless, Kathleen Smith, principal and manager of IPO-focused ETFs at Renaissance Capital, said she expects activity to pick up come Easter time, when most companies file their year-end reports.

“We don’t think we’re at the 2008-2009 period,” she said. “We’re going to see good companies go public.”

Smith also noted that, as market volatility keeps falling, more companies will feel more comfortable going public.

The CBOE Volatility Index, or the VIX, a popular fear gauge in the market, has dropped about 50 percent since the S&P 500 hit its Feb. 11 intraday low of 1,810.10. Since then, the benchmark U.S. index has gained more than 11 percent.

Also, the Renaissance Capital IPO ETF has gained more than 18 percent since Feb. 11.

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