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Why Did The IPO Market Took A U-Turn In June?

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Though the year 2015 saw prominent tech names like Etsy Inc (NASDAQ: ETSY), Box Inc (NYSE: BOX), Shopify Inc (NYSE: SHOP), and Fitbit Inc (NYSE: FIT) getting listed, according to Renaissance Capital founder, Kathleen Smith, the numbers weren’t as good until this month.

Smith was on CNBC to discuss why the IPO market is heating up now and impact of big tech IPOs on the market.

June Changed Everything

"It looks like the IPO market has been in pretty good shape," Smith began. "It didn't look that way prior to this month of June, we were down based on proceeds and numbers of deals about 35 to 40 percent, but in June all of a sudden the light switch was turned on and we've been showered with companies that are scheduled to go out.

"So, it looks like this month of June we are going to see as many IPOs as we saw in the year 1999, we have to go back way far to get it."

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She continued, "So, why is the light switch on?  The grease for the IPO market has to do with returns and we have seen positive returns for investors. Not just on their first day, but in after-market trading and that's what it takes to get the IPO engine rolling."

Uber's Impact

On the impact that big tech companies like Uber can have when they go an IPO, Smith said, "Well, I think the issue with this very large companies like Uber is the path to profitability and I think that's the issue. Can we see these companies and figure out what their long-term cash flow looks like? And so, they're growing in the private market and are able to delay going public.

"They will make a big impact, particularly if they are showing us the kind of earnings that they are hoping for."

Posted-In: Kathleen Smith Renaissance CapitalCNBC IPOs Media

 

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