The excitement for high-tech IPOs has returned and Concentric Network (CNCX) today became the latest link in a recent chain of successful launches after the tech IPO market bottomed out earlier this year.
"The best evidence [of a turnaround is that] first-day gains have steadily increased," said Richard Peterson, an IPO analyst at Securites Data.
@Home's stock jumped more than 130 percent from its offering price on the first trade of the day, and Rambus saw a 98-percent jump in its first trade. CMP saw a more moderate jump of 18 percent. Concentric's share price jumped about 33 percent today. (See related story)
Last May, IPOs hit rock bottom when by the close of the launch day, companies' stock gained less than 8 percent on average. But this month has seen average gains of about 18 percent.
"IPO activity was sluggish in the spring, but that coincided with the fear that the Fed would increase interest rates, which caused general pessimism," Peterson said.
And the situation was even worse earlier in the year. During the first quarter, a rise in interest rates, poor earnings, and fund managers' oversubscribing of deals put a damper on public offerings, said Peterson.
But since the 10 percent correction in May, the Dow Jones Industrial Average has rallied another 2,000 points, and fears of raised interest rates have been subdued by moderate economic indicators. That atmosphere is perpetuating continued expectations, but for the technology stocks, earnings and price follow-through have been solid.
And since mid-June, roughly a dozen technology companies have filed for an initial public offering and are in the pipeline.
"The recovery is not an avalanche, but the drought is over," Peterson said. The successes set the stage for continued recovery among technology IPOs.