IPO Market Accepting Money-Losing Firms

“Stock investors are welcoming money-losing companies into public markets this year with open arms,” according to an article in The Wall Street Journal. Citing data compiled by University of Florida finance professor Jay Ritter, the article reports that about 83% of U.S. listed IPOs in the first three quarters of 2018 involved companies that “lost money in the 12 months leading up to their debut,” which the professor says is the highest percentage on record.… Read More

Startup Companies in U.S. Have Less Need to List

A recent article in The Economist discusses what has become a long-term decline in the number of publicly-listed firms in America. The article explains that while regulatory headaches and red tape have increased the cost of going public, the trend is really a referendum on the supply side of capital markets. “In the 1990s, specialist venture-capital firms were almost the only option for startups seeing money to finance their expansion,” the article explains, adding, “Nowadays… Read More

Are U.S. Capital Markets as Healthy as They Look?

A recent article in U.S. Chamber of Commerce Foundation discusses the capital market conditions behind the now nine-year-old U.S. bull market, including the shrinkage in the number of publicly-listed firms to “just one half what it was in the mid-1990s.” Over the past twenty years, the article reports, “U.S. companies bought back vastly more stock than they issued,” to the tune of $3.6 trillion. IPOs have also dropped off considerably, the article points out, citing… Read More

Sexy Companies Don’t Necessarily Make Good Investments

Snap Inc. (the maker of the popular social app, SnapChat) has been getting a lot of attention of late, according to a recent article in the Financial Times, and not just because of its imminent initial public offering at a time when such events are a rarity. The article states, “It’s a company reaching out to the public markets even as it loses money hand over fist,” citing data from Dealogic that says Snap is… Read More