The IPO window will be tested this week with six offerings, two of which are venture-backed companies: Broadsoft (BFST), a 1998-era telecomm software company, and Motricity (MOTR), a 2001-era mobile software company.
UPDATE: Broadsoft priced at the bottom of its range, a poor sign.
The last tech IPO, ReachLocal (RLOC), priced below its range and fell below early last week, only to rise back slightly over the offering price. From the first day close, it has dropped quite a bit and is still down (see chart), but a few more days like today and it goes back to positive in the after-market.
The keystone IPO is coming up: Tesla Motors (TSLA), the first serious auto startup since Chrysler in 1925 and the biggest auto IPO since Ford in 1956, should price the week of Jun28. The lead underwriters, Goldman Sachs and Morgan Stanley, announced a price range today of $14-16, valuing the company at $1.5B and seeking to raise $167M from the public and another $50M from Toyota. This is an increase from their expectations back in January when they first filed. Unlike Ford, which was profitable very quickly, Tesla has yet to make a profit; yet is highly awaited as an IPO. The increase is a good sign of confidence by the underwriters.
While the tech press is generally positive, we do have the headline Blockbuster or Dud? based on recent green IPOs. A123 (AONE) jumped 50% on its first day but since has fallen to 33% below the IPO price with an aftermarket return of -56%. The Wall Street crowd may be even less kind, saying: “The car business is a fairly weak business, and there’s lots of room for Tesla to run out of juice before getting plugged on.”
After Tesla, ZipCar intends to IPO, followed by GM re-IPOing after its LBO by the US Govt. The Tesla and Zip IPOs may be coming out a bit prematurely for the market to be ready for high-burn unprofitable ventures which lack the scale of competitors. Still, they both have enough sizzle to make up for the lack of beef.
Tesla will test the IPO appetite and likely determine whether it remans open or shuts down for the rest of the year.