This year has so far been a boom one for US tech IPOs, which have performed well above market peers.
Connecticut-based IPO research firm Renaissance Capital reveals that 19 tech IPOs have taken place so far this year in the US market and seen, on average, a 40 percent increase on their offer price. By comparison, non-tech stocks saw an increase of just 10.2 percent.
‘If investors can get a US tech IPO as part of their asset allocation they have a pretty good shot of making a very decent return,’ says Matt Kennedy, IPO market strategist at Renaissance Capital.
This is a turnaround for tech stocks: in recent years the number of US tech IPOs has been up and down with 2015 seeing 29 and 2016 a low of 21. In 2017, however, the total increased to 38.
‘I would expect the current trend [of tech IPOs] to continue throughout the rest of the year,’ adds Kennedy. Based on what has happened so far, there will therefore be in the region of 57 tech IPOs on the US market this year – a record number.
The stock price of the 19 tech companies that have already debuted has seen an immediate increase, with an average 27 percent boost on the first day. ‘That is a healthy after-market performance,’ says Kennedy, shedding some light on the reason why: ‘Tech companies have generally been going public at valuations below their public peers, so they are pitching attractive valuations.’
It’s not just about the numbers, though – these are the big beasts of tech IPOs, including DropBox, DocuSign and Spotify.
‘This year through to 2019 should see a very large pick-up in high-value companies, particularly in the tech sector,’ notes Kennedy.
