Facebook hasn't recovered all of its losses since going public in May in a problem-ridden offering. But market fears from its high-profile stumble seem to be fading. Fender Musical Instruments Corp., the well-known guitar maker; Palo Alto Networks, which creates firewall protection for computers; and Kayak, the travel website, all filed IPO terms Monday.
The fallout from Facebook's initial public offering scared off other companies. After Facebook's debut on May 18, it wasn't until June 26 that another company broke the drought and went public: natural gas company EQT Midstream Partners. EQT confidence sparked a mini-revival of sorts, with three other firms — two software companies and a biopharmaceutical company — going public that week.
Monday brought more signs that the frozen IPO market could be thawing, with Fender, Palo Alto Networks and Kayak all announcing terms.
Kayak expects its long-delayed initial public offering of 3.5 million shares to bring in between $77 million to $87.5 million. Fender expects to pull in $139.3 million to $160.7 million, down from an original forecast of about $200 million. Palo Alto Networks plans to raise as much as $229.4 million from an initial public offering of 6.2 million shares.
Still, a handful of companies does not equal a complete turnaround.
"There's no one who should be out there blowing their horns and saying we're in a dot-com boom here in IPOs," said Scott Sweet, senior managing partner at IPO Boutique. "There are still people seething mad about Facebook, and a lot of trust was lost."
Investing in a newly public company is inherently risky, but even so, a lot of investors were angry when Facebook's stock didn't pop in its first day of trading. The launch was held up by trading glitches on the Nasdaq Stock Market. And it was further marred as investors began accusing the banks that arranged the IPO of sharing important information about Facebook's business prospects with some clients and not others.
Lawsuits and government inquiries followed, dampening appetite for any more public offerings. Facebook shares are still down about 15 percent from its initial pricing.
Public offerings can be a read on the broader economy. They show that investors are willing to take risk and believe that a company's stock will go up.
But the problem was bigger than just Facebook, argues John Fitzgibbon, founder of IPOScoop.com. The real reason the IPO market froze, he says, was because of weakness in the overall stock market. The Nasdaq composite index lost more than 7 percent of its value in May, driven lower by concerns about Europe's debt crisis and the sluggish U.S. economy.
"All the fanfare about Facebook," Fitzgibbon said, "was a sideshow."
Sweet thinks that the banks that underwrite IPOs will focus on companies with good name recognition for the near future. Fender and Kayak are examples. So is Palo Alto Networks, at least in the tech world.
"People have been waiting for that deal for a year," says Sweet.