Three soaring Silicon Valley IPOs in nine days, so what’s next?
Posted: 03/25/2013 09:46:38 AM PDT
With this month’s soaring stock debuts of three Silicon Valley companies — two of them in long-neglected tech sectors — Wall Street appears to have officially moved past the tech stock uneasiness that emerged after Facebook’s flop last spring.
A new report by Ernst & Young shows that far more companies went public than expected in the first quarter of this year, and the trend seems sure to accelerate with the recent IPO successes of Silver Spring Networks, Model N and — on Friday — Marin Software.
Still, there are reasons to temper the market’s "March madness."
Initial public offerings, which power Silicon Valley’s tech economy, tend
Traders work at the post that trades Marin Software following their IPO at the New York Stock Exchange, March 22, 2013. REUTERS/Brendan McDermid ( BRENDAN MCDERMID )
to come in waves, and some analysts say there’s always the risk that a rush to market will admit unqualified "dogs" that could spoil things with IPO flops.
"I think there’s still caution out there," said Derek Dowsett, who heads the Silicon Valley practice of accounting and consulting firm Moss Adams.
Even the three local companies whose IPOs have taken off this month carried warning signs.
All three operate in the "sweet spot" the stock market seems to be looking for: selling software to big companies via the remote computer network known as "the cloud." On average, the IPOs gained 25 percent on their first day of trading.
But none of the three are profitable, even though these days that’s hardly a badge of shame