In light of today’s LinkedIn (LNKD) double, I want to refer you to this spectacular act of research by Prof. Jay R. Ritter of the University of Florida, who reviewed the initial public offerings (IPOs) of common stock ( >$5.00 and proceeds >$5 million) of all non-ADR operating companies during 1975-2004 that at least doubled in price on the first day of trading.

The ten biggest first-day percentage increases are:

1. Va Linux (12/09/99)  697.50%
2. Globe.com (11/13/98) 606%
3. Foundry Networks (9/28/99) 525%
4. Webmethods (2/11/00) 507.50%
5. Free Markets (12/10/99) 483.33%
6. Cobalt Networks (11/05/99) 482%
7. MarketWatch.com (1/15/99) 474%,
8. Akamai Technologies (10/29/99) 458%
9. Cacheflow (11/19/99) 426.56%
10. Sycamore Networks (10/22/99) 386%.

Professor Ritter’s full research piece has 100s of IPO first day price pops, and makes for fascinating reading.

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click for full research piece

Category: Investing, Markets, Psychology

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

20 Responses to “First Day IPO Pops”

  1. You’re making me nostalgic Barry

    The CNBC pom poms were really flying back then, weren’t they?

    Those were the days when you couldn’t argue with a bubble head. Everyone was an investing genius

  2. Invictus says:

    It’s a walk down Memory Lane.

  3. dead hobo says:

    RE: Linkedin

    I really don’t understand why an on-line social network that specializes in on-line resumes for unemployed and potentially unemployed executives is worth anything. This is not a demographic with a lot of spending money for luxuries, except to celebrate the new job. Except for personnel departments, I can’t imagine anyone signing on to lnkedin would go there for diversion. Post the resume, research potential employers, and then never go there again if you are lucky and you don’t get fired again.

    Ditto with Groupon. Coupons are the lowest barrier to entry business imaginable.

  4. dead hobo says:

    RE: Linkedin

    To those buying today at any price or ANY day after today, unless as a penny stock: SUCKER SUCKER SUCKER SUCKER SUCKER SUCKER SUCKER ……….. (infinity) SUCKER SUCKER …

  5. realgm says:

    Can’t really see how LinkedIn is so valuable. I do know agents, recruiters, and some friends looking for jobs would update it and use it. However, I think majority of the accounts on LinkedIn are probably inactive and why bother to update it if you are not looking for a job (as most people are probably ok to stay at their current jobs).

    I personally haven’t really used it since I registered and I have never gotten a job through it.

  6. Joe Retail says:

    This always suggests to me that if the owners don’t scream about the pops, they must have thought it was ludicrously overpriced at the IPO price. In other words, there’s so much money sloshing around they don’t mind if speculators get a huge cut for taking on the risk. Their share is already more than they dreamed of in their wildest dreams.

  7. Joe Retail says:

    And, yes, I’m on LinkedIn but often wonder why. In the industry where I work everybody knows everybody anyway – it’s just another place to keep my Rolodex.

  8. dead hobo says:

    realgm,

    I don’t have an account there. I followed one person on it for awhile, partly because I was happy he was unemployed. The bastard put his name on some things I did on linkedin. I learned about narcissistic personality disorder with a touch of sociopathology working with him. It makes me wonder how much posted there is true.

  9. Petey Wheatstraw says:

    The pump always precedes the dump.

  10. socaljoe says:

    It never ceases to amaze me how eager the investing public is to enrich the founders, insiders, and bankers.

  11. rktbrkr says:

    Too bad there’s no naked shorting.

    I remember years ago probably around 1999 the WSJ had a wonderful article about a half dozen companies to short and I put as much as I could into a few of them and did great, forget the names except for Skymall. The toughest part was deciding when to take a profit or ride them down to zero – and a few of them did get to zero.

  12. rktbrkr says:

    Why you can’t short Linkedin (it’s a one way market, shorts are unpatriotic, they help pop bubbles)

    http://www.cnbc.com//id/43098403

  13. mysterious eggs says:

    @rktbrkr thanks for helping me laugh.

    “Investors getting long at these levels beware: the twitter stream today was rife with commentators ruminating on the similarities of the LinkedIn IPO to the 1995 IPO of Netscape. And that did not end well for longer-term investors of Netscape. ”

    Yes, very similar, except Netscape (mosaic) created the web browser paradigm we still use today and LinkedIn is a poor substitute for an up to date contacts list in gmail? It’s like comparing apples to dust bunnies. However anyone says it, welcome to .Bomb 2 beta.

  14. Tarkus says:

    If they insiders don’t sell, that means they are waiting to stoke a bigger frenzy for the IPO’s that follow…

    Maybe if they can ratchet up the frenzy and get a social media site that produces nothing to IPO at a market cap of a trillion dollars they’ll finally unload all the useless POS’s.

  15. hammerandtong2001 says:

    Well the difference is that “LNKD” actually earns a profit. Of course the PE is about 1000.

    I made a small fortune shorting NTRO.

    And I will bide my time on LNKD. And short this POS to the single digits — where it belongs.

    .

  16. Lyle says:

    Once again the underwriters get to make friends by deciding who gets the issue price. Why we can’t set the price by a reverse auction is unclear. Change the process so the underwriters never own the stock even for a second, but rather those who want the stock bid what they will pay and you start at the top price and walk down the chain until enough shares are included, that price sets the issue price. Of course this reduces the potential revenue for the useless investment banker. The issuer would get a better price, but as noted the investment bankers would not get their vig which is obviously the most important thing. (leeches and vampires all)

  17. [...] Top 10 IPOs that went in excess of 100% on first day. 50% of them have gone *poof* [...]

  18. dead hobo says:

    Here’s a moneymaker.

    Add some mega cpu power to TBP. Allow registered users to create personal pages. Rebrand TBP as an economics social network and tell the rubes right before the ipo that all sorts of movers and shakers congregate here as an exclusive place to share valuable financial ideas. Then pocket a couple of $B in stock, reserving the right to sell it ASAP after issue. Your welcome.

  19. rktbrkr says:

    I don’t know much about LNKD, I think of it as the modern day version of 40 plus, a bereavement group mourning their job losses, not a really attractive demographic

    Hobo, good idea, we’re a much more elite group than LNKD

  20. dead hobo says:

    Or have you tried deal of the day yet. I use adblocker so if you already do deals, sorry, I never see them.

    For example you could sell coupons for 50% off exclusively distributed stock tout sheets or newsletters from noted financial prognosticators. Or once the Chinese reverse merger craze really takes off, you could sell coupons for 50% off recently issued shares from US shell company counterparties. I bet even Money magazine could pay you to offer coupons for their fine publication. Then get the VCs to give you megabucks to expand your cpu power for even more exclusive deals to offer. Cha ching, and you might even get interns to do the work for you.