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Tech IPOs this year have had to launch in unusual, volatile circumstances. But for the most part, they've got one thing in common: gigantic pops.
Looking at the 15 large tech listings of the year so far (not including Unity, which listed Friday), all but one popped. On average, they ended their first day of trading 81% above their IPO price, and some traded much higher: BigCommerce, which had the biggest pop, tripled in value.
Research from Renaissance Capital suggests that, though pops are normal, this year is particularly abnormal: Across all industries, the average first-day performance has been a 36% rise, well above the historical average of 14%. And Ipreo data shows that tech, with an average gain of 28%, only lags health care in terms of its first-day performance.
The pops have reignited debates about whether the IPO process is broken. Critics argue that companies are leaving money on the table and giving handouts to large institutional investors. Proponents, meanwhile, point out that the first-day trading price might not accurately reflect what an entire IPO block could be sold for. They also point to the risk that investors take on by buying illiquid stock — something that investors in Rackspace, the only tech stock to fall on its first day of trading this year with a 22% plunge, know all too well.