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Monday, August 25, 2014

Record breaking IPOs

By Linda Perez
                                 
Business leaders have been launching private companies to the public market for over two hundred years. IPOs used to be known as stock subscriptions in the early days, but the principle of issuing stock to the public market has led to enormous growth opportunities over the years.

Growth potential


The success of an IPO service is measured by growth over time, not simply the initial public offering stock price, and how rapidly it may rise. Once stocks can be purchased on the open market, trading prices are determined by market forces. Many IPO stocks have extremely high volumes of trade on the first day as investors buy and sell. Stocks may leap in price, but the first few days are a volatile time for the newly-public company.

The following is a brief overview of some record breaking IPO services.

The largest initial public offerings
Stock trades in the secondary market following an initial public offering

Agricultural Bank of China


The Chinese IPO market is the world’s largest, outstripping the US since 2009. The Agricultural Bank of China (ABC) raised US$19.2 billion at its IPO in June 2010 – the biggest IPO in history. Though the stock then fell, the bank was worth US$128 billion on its first day. Investors worldwide are currently looking to China for stock investments.

Industrial and Commercial Bank of China


The Chinese dominance of the world IPO market started with the Industrial and Commercial Bank of China (ICBC), which went public in October 2006. Their IPO was a record breaking US$19.1 billion, a record broken by Agricultural Bank of China four years later. The market was confident ICBC would return profits--perhaps because their retail customer base at the time of launch was 153 million people.

Visa


Visa launched in March 2008, and their launch was the biggest IPO in US history. The company raised US$17.9 billion—over a billion more than Facebook’s IPO.This is particularly impressive as Visa launched in the early days of the global financial crisis. Visa is still going strong. Their 1-day return was 28.4 percent, and their 1-year return was 28 per cent. Visa Inc. stocks were US $225.56 on March 7, 2014.

General Motors


GM went public in November 2010—a record breaking turnaround, as it they launched their stocks just over a year after filing for Chapter 11 bankruptcy. The global economic recession had hit GM hard, and despite a US Treasury grant the auto giant was forced to file Chapter 11. After filing, the US Treasury loaned GM US$30 billion and received a 60% stake in the company. GM’s IPO was a success story. They raised US$15.8 at their IPO, one of the biggest in US history. GM stocks were US $37.69 on March 7, 2014.

Facebook


Facebook’s IPO is probably one of the most well-known, as tech giants like Facebook and Twitter garner a great deal of media attention. Facebook went public in May 2012, and raised US$16 billion. However, record breaking first days did not mean instant success. The 1-day return was 0.6 per cent, and Facebook’s 1-year return was a negative 30.9 percent. Share prices did not rise above the initial frenzy until over a year after they launched, though in 2014 the stocks are reaching all-time highs. Facebook, Inc. stock was US $69.80 on March 7, 2014.

Twitter

Twitter launched with as much publicity as Facebook, and also closed their first day lower than they opened. The social media company went public on November 2013, opening at US$45.10 and closing at US$44.90. Twitter, Inc., stocks were US $53.53 on March 7, 2014.

UPS


UPS had a record breaking initial offering price: US$50 per share when they launched in November 1999. The parcel delivery company raised US$5.5 billion in its IPO, with a 1-day return of 36.3 per cent, and a 1-year return of 17.3 per cent. UPS stocks were US$98.22 on March 7, 2014.

HCA Holdings


HCA Holdings, which runs hospitals in the US, had the largest private equity-backed IPO. HCA raised US$3.8 billion in when they launched in March 2011. HCA’s 1-day return was 3.4 per cent, but their 1-year return was a negative 14.6 percent. HCA stocks were US $49.63 on March 7, 2014.

All-time US success


Whole Food Markets


Whole Foods’ went public in 1998. The supermarket chain, which opened in 1980, has seen an astounding one thousand per cent growth from their market cap of US$104 million in 1992, to their market cap of US$6.38 billion in 2010.Whole Foods Market, Inc. stocks were US $53.67 on March 7, 2014.


About the author: Linda A Perez has been in the finance industry for the past 2 years. She is presently working at a finance company in Canada. She has her interests in cooking, photography, craft and painting. Follow her on https://www.facebook.com/linda.aperez.169

Image license: Royalty Free or iStock source: shutterstock.com