LOS ANGELES (AP) — A splashy Wall Street debut by Bazaarvoice Inc. and Proto Labs Inc. is the latest sign that investor appetite for initial public offerings has rebounded after a dismal IPO market in 2011.
Social commerce site Bazaarvoice and custom parts manufacturer Proto Labs each drew strong demand for their stocks in their first day of trading on Friday.
Proto Labs' shares surged 81 percent from its opening price of $16 to end regular trading at $29.
Shares of Bazaarvoice opened at $12 and climbed 38 percent to $16.51.
The companies' stock performance reflects an improving climate for IPOs in recent weeks, as the Dow Jones Industrial average has flirted with 13,000.
The Dow dropped 1.74 points to close at 12,982.95 on Friday. The average hasn't closed above 13,000 since May 19, 2008.
The IPO market typically lags behind the rest of the market, and now investors are looking upon IPOs more favorably.
"Investors are starved to find companies that can grow internally, and these two companies are smaller examples of that," said Francis Gaskins, president of IPO research site IPOdesktop.com.
Companies planning an IPO typically propose a price range for their stock. But until the IPOs of Bazaarvoice and Proto Labs, more than half of the IPOs this year had ended up being priced below their expected range, said Kathleen Smith, principal at Renaissance Capital, an IPO investment advisory firm.
"The companies have had to offer great discounts to get investors to come in and that's resulted in outperformance," she said. "And the results have been that investors have been very happy with the performance."
Bazaarvoice, based in Austin, Texas, operates a social commerce site that allows customers to display and analyze consumer-generated ratings and reviews on brands, products or services. The initial price range for its IPO was $8 to $10, well below where it ended up at the end of the day.
Proto Labs, based in Maple Plain, Minn., manufactures custom parts for prototyping and short-run production for product developers who are under increasing pressure to bring their finished products to market quickly. Its IPO range had been $13 to $15.
Investors looking to get in on the ground floor of companies will have more chances next week, when Yelp Inc. is expected to launch its IPO.
The San Francisco-based online review service set a range of $12 to $14 for its IPO, and will be coming to market amid feverish anticipation for Facebook's IPO.
The Internet social network filed its IPO papers at the beginning of this month, putting it on track to price its stock in May or June. Facebook Inc. is expected to be valued at $75 billion to $100 billion.
The interest in the IPOs of Internet companies with large audiences should help give Yelp a boost that goes well beyond Wall Street's regulars, Gaskins said.
"Yelp has 66 million active users, so some of those people are going to buy the stock no matter what," he said. "The happy customer demand will probably drive the stock price."
1 comment