Dog Days of Summer for IPO Market ?

Many of you know, from previous entries that the Tesla IPO (NASDAQ:TSLA) was a wild ride and offered huge gains to many who bought in the aftermarket. However, this week is no different from years past. Using the word slow is an understatement. Consequently, Fortune Bank IPO (NASDAQ:FBBC) is the only new issue scheduled to trade this week. The outlook for the deal is a mild premium and in no way can be confused with Tesla Motors Inc which provided many with the volatility and excitement that you can find in penny stocks. Next week will be a little more active with three deals scheduled to price. Business software company, Qlik Technologies IPO (NASDAQ:QLIK) is thought by some to trade at a decent premium.  Real ID (NYSE:RLD) is also expected to trade at a  nice premium.

The remaining IPO on the syndicate calendar is the Canadian company Smart Technologies IPO (NASDAQ:SMT) which IPO services say may trade at a small premium. Keep in mind that Tesla traded higher on a big down day in the market. While you never know how new issues will trade, quality offering can still trade at premiums in bad markets. The best thing to do is form a list and be prepared. It doesn’t matter whether your investing in an IPO list or a penny. Being prepared to act is the key. Remember there is an Tesla aftermarket buyer who was filled @ 17.54. That buyer had the opportunity to sell the stock over $30 the next day. Now that is a massive gain! I think it’s safe to say that some of those Tesla aftermarket buyers did their homework.  IPO’s and penny stocks can offer huge gains and we are always looking for the next huge winner.

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Think an IPO Offering is Safe? Think Again

As many of you may know, the IPO market has been very shaky recently. Some deals have seen penny stock like volatility. We have seen a flood of private equity deals come to the market, and this has turned institutions and retail investors sour on some of the last few offerings. Express Inc. (NYSE:EXP) is a prime example. Express was once a division of The Limited Brand (NYSE:LTD) until a majority stake was taken by Golden Gate Private Equity. As all private equity firms do, Golden Gate cashed in on the IPO.

The once solid Express deal, lost street interest and was priced at $17.  This was below the original price talk of $18- $20 that was expected. Today, the stock is trading in the $13 range. As mentioned above, this has cast doubt into future private equity IPO’s and may continue into the near future. Even with companies as established as Express.

The Toys “R” Us IPO could be the next test of this trend. KKR and Bain Capital have large stakes in the $800 million IPO. IPO’s in some regard are like hot penny stocks. They offer the chance of high percentage gains to speculative investors.

Next week’s flagship IPO is CBOE Holdings. Goldman Sachs is the lead manager of the deal. Some IPO services are calling for a $4 premium on the first day of trading. The deal is being priced between $27-$29. As most people know, CBOE like most highly anticipated IPO’s will be as volatile as a high beta gold stock on the first day of trading. Since IPO allocations of CBOE for retail investors will be virtually non-existent, most retail investors will be forced to participate in the aftermarket.

Keep in mind that while the reward is there, the risk is too.

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