2011 IPO Market Results

2011 IPO Market Results

Blog The Road to IPO: Legal and Regulatory Insights into Going Public

The US IPO market produced 97 IPOs in 2011—a 29% decline from the 136 IPOs in 2010. Through the first seven months of 2011, the number of offerings was well above the number in the comparable period of the prior year, but then the IPO market stalled due to European economic concerns. After producing a mere four IPOs from August to October, the market rebounded nicely to end the year with strong momentum.

Gross proceeds dropped 17%, to $28.7 billion in 2011 from $34.7 billion in 2010. The percentage decline in gross proceeds was less significant than the reduction in deal flow, due to the presence of six billion-dollar offerings in 2011. The sole offering of this magnitude in 2010 was the $20.1 billion offering by General Motors—the largest IPO in US history—without which gross proceeds in 2010 would have lagged behind the 2011 total by a wide margin.

The largest IPO of 2011 came from hospital operator HCA Holdings ($3.79 billion). Yandex, Russia's leading online search engine, produced the year's largest tech IPO ($1.435 billion).

Median IPO size increased 44%, from $97.9 million in 2010 to $140.4 million in 2011. The 2011 figure represented a resumption of the upward trend in median deal size since 2004.

In 2011, there were two "moonshots" (IPOs that double in price on their opening day)—Chinese Internet company Qihoo 360 Technology soared 134% in first-day trading, and online professional network company LinkedIn jumped 109%. Qihoo surrendered most of this gain in the aftermarket, ending the year up only 8%, while LinkedIn also retrenched, to end 2011 up 40%.

The average first-day gain for all IPOs in 2011 was 14%, and 26% of the year's offerings were "broken" IPOs (IPOs whose stock closes below the offering price on their opening day). These results compare favorably to 2010, when the average first-day gain for all IPOs was 10%, and 31% of the year's offerings were broken IPOs.

Aftermarket performance, however, was much poorer in 2011 than in 2010, as capital markets were buffeted in the third quarter of the year. The average 2011 IPO lost 13% from its offering price by the end of the year, with only 39% of the year's IPOs trading at or above their offering price at year-end. In contrast, the average 2010 IPO appreciated 28% by the end of the year, and 66% of the year's IPOs were trading at or above their offering price at year-end. Performance metrics from first-day close to year-end painted an even starker picture, with the average IPO of 2011 declining 18% on this measure.

IPO companies were less profitable in 2011 than in recent years. The percentage of profitable companies going public dropped from 58% in 2010 to 51% in 2011—the lowest percentage since the dot-com boom in 2000. The median annual revenue of IPO companies increased slightly, from $97.6 million in 2010 to $98.7 million in 2011. These results illustrate the continuing bifurcation of the IPO market, which seeks larger and more profitable companies, while also embracing younger technology companies with strong growth and a demonstrated path toward profitability.


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