Shares of Groupon soared to $26.11 on its first day of trading as a public company, a very healthy (and somewhat surprising) 30 percent pop. But fast-forward to today, and things look very different for the operator of daily deals. Groupon is now trading at $18.95, below its $20 offering price from November 4th.
And Groupon is not alone. On average, every tech company that’s gone public in 2011 has started off strong and then promptly been on a downward path, notes Daniel Hom, a data analyst at Tableau Software who put together the interactive chart below. (Previously on GeekWire: Tech: The worst IPOs of 2011)
It’s not a total surprise that tech companies often falter after their first few days in the market. In fact, even Seattle-based Zillow — one of the best performing IPOs of 2011 — has seen its shares sink back to Earth in recent days.
That’s being driven in part by an accelerated expiration of the lock-up period for Zillow insiders who were able to start selling off a chunk of their stock in late November. Shares have fallen more than 18 percent in the past two weeks since the lock-up expired. The stock, which closed Friday at $22.06, is still above the $20 offering price.
But many recent tech IPOs aren’t faring that well. In fact, Hom’s analysis finds that just seven companies (including LinkedIn, Zillow and Fusion-io) are in positive territory.
The first-day pop phenomenon is certainly worth investigating, especially in light of recent stories about Zynga and Facebook considering IPOs.
What do you think? Do you purchase shares of tech IPOs or stay away from them like the plague?
Check out the graphic here: