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Sat, Jul 07, 2018 – 5:50 AM
INVESTORS lucky enough to get shares in connection with a major IPO and not be forced by a lock-up would be advised to unload them immediately.
I'm looking at the next blockbuster like Xiaomi Corp., do not bother.
I've gone through the figures of more than 1,300 IPOs in technology, media and telecommunications (TMT) over the past five years. While lock-up periods for investors prior to the IPO and front-line investors typically expire after six months, it is notable that between six months and one year after the end of the blocking period. the list is the real danger zone, with only 40% of companies climbing within this time frame.
And the bigger the offer, the worse it is.
On the top 20 IPOs by sale size, only end of the first trading day to a year after its debut. Eleven fell and three were not exchanged for a whole year, so I did not count them.
Of the top 10 per size offering, only Auto Trader Group Plc climbed from its early close to the end of the first 12
Foxconn Industrial Internet Co is TMT's second largest offering behind Alibaba Group Holding Ltd, raising 4.3 billion US dollars. It jumped by the daily limit of 44 percent last month, but has since declined. iQiyi Inc., the sixth largest, fell 13.6 percent on the first day of March, tripled in the next 10 weeks, and dropped to about 25 percent below its June 20 peak.
Shareholders of Adyen NV, seem to hang on to the action believing that there is still a potential upside after its 90 percent jump to the beginning of last month. Three weeks later, he maintained this evaluation
The story, however, is not on the side of Adyen.
The negative correlation between size and yields is slightly more pronounced using a measure called "market value at registration". Adyen ranks ninth
Among the top 10 companies in the list, zero climbed between the end of the first day and the end of the first year. Not one. Nada. The "best" actor was Twitter Inc., which jumped 73 percent the first day but fell 9 percent over the next year. Alibaba and Snap Inc. (up 44 percent on debut) dropped 30 percent in the next period.
Of course, companies that IPOs are not meant to be losers in the stock market forever. The last five years have seen an uptrend for the TMT sector; the MSCI World Information Technology index is up 130%. But investors determined to buy new technology companies for the long term would be better to wait at least a year for the IPO hangover to pass. BLOOMBERG
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