IPO Performance: Historical IPO Performance

Here are some historical facts about the IPO Performance which dates back to 1960.
This would a nice example for people who believe that IPO or Initial Public offerings are the easiest and sure shot way to make good money in the short term.

The graph below shows the historical performance of the IPO markets sine the year 1960. The graph also shows the number of IPO’s that were brought into the markets – which is displayed by the SOLID BAR GRAPHS.
The DOTTED LINE GRAPH shows the average initial returns for all the IPO’s in that respective year. Initial Return may be a bit vague term, but it indicates the short term period between the IPO offering and the Listing date returns


Let’s begin with the best case. In the year 1968, the IPO’s on an average provided 58% returns. The worst case – in 1974, when the returns from IPO’s were -20%. Another thing to observe is the relation between the number of IPO coming to the markets and the returns.
Majority of the companies come to the stock markets with their IPO only when the markets are doing good. So in 1986, where almost 900+ companies hit the stock markets, the average return on their IPO was a meager 10%. The best case return year of 1968 saw only 300+ companies coming to the markets.
Can any conclusion be drawn from such observation?

I don’t see anything as far as the relation is concerned. Only one thing can be observed - Markets work Randomly, and that includes the IPO.

May be you can observe the graph in you own style and make your own inferences from that. If you can find a relation or observation which can lead you to a profit making investment, then keep it to yourself! : -)

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