The initial public offering (IPO) market died a brief death a couple of years ago at the height of the financial crisis, but has since come roaring back, causing either good fortune or pain and suffering to investors who play in this area of the market.
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Motricity (Nasdaq:MOTR) went public at $10 per share in June 2010, and performed poorly at first, falling below its offering price and staying there for several months. The stock then took off in early October 2010, and has not looked back since, returning 220% to investors who bought in at the IPO and stuck with it. Motricity sells software and other products that allow phones and other devices to receive mobile data services.
HiSoft Technology (Nasdaq:HSFT) provides outsourced information technology and research and development services to other companies. The company was also a winner in 2010, returning 170% to investors that invested in the IPO in June at $10 per share. Like Motricity, HiSoft Technology moved sideways for a few months before jumping higher during autumn's stock market rally. The company recently reported its results for the third quarter of 2010, and increased revenues by 71% over the same quarter in 2009.
One of the worst IPOs over the last 12 months was also a Chinese company. China Nuokang Bio-Pharmaceutical (Nasdaq:NKBP) went public in December 2009 at $9 per share. The stock has moved steadily lower since that time, hitting a recent low of $3.78 per share, and giving some unlucky investors a loss of 55%. China Nuokang Bio-Pharmaceutical recently reported net income of $1.4 million in the third quarter of 2010.
The most disappointing IPO to investors so far in 2010 has to be DynaVox (Nasdaq:DVOX), which makes speech generation equipment, software and services to assist people with disabilities. The company went public in April 2010 at $15 per share, and at first looked OK. After a series of disappointments, the stock hit a recent low of $3.95, giving investors at the IPO a loss of 72%.
The market for IPOs is known for its volatility, and that became perfectly clear to investors in 2010, as some got wealthy and some took major hits to their portfolios during the year. (For more, see our IPO Basics Tutorial.)
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