IPO fever

May 24, 2011

LinkedIn's IPO seemed like a flashback to the heyday of the 1990's. The company's stock doubled in value on its first day of trading. On this week's Money Matters, financial commentator Greg Heberlein thinks this will be a good year for IPOs. At least three locally based companies are preparing to go public, and more may be waiting in the wings.

Already filing plans with the federal Securities Exchange Commission are: Zillow, the Seattle online real-estate company; HomeStreet, Seattle owner of HomeStreet Bank, and Impinj, a Seattle computer-chip maker. Bellevue-based Expedia, the travel service already publicly owned, has indicated it expects to spin off its TripAdvisor unit to the public.

That may be only the start of an IPO flood.  Already, market watchers are buzzing about a potential public offering for PopCap, the Seattle maker of the Bejeweled videogame.

Why go public?  Converting from privately held to publicly held can be the road to riches for those already ready involved in the business. That includes founders, employees and early investment backers.  The fresh capital also can enable a company to wipe out debt and expand its business.

How can you participate in a new offering?  Unless you have a substantial account with a brokerage involved in the deal, chances are almost nonexistent. But here’s a possibility: Those running the stock sale like to price the stock a few dollars lower than they estimate outsiders are willing to pay. That means that moments after the stock begins trading, newcomers might get a good deal. The demand for Microsoft shares in 1986 was so great that the shares priced at $21 zoomed as high as $29.25 by day’s end and $49 by year end. But although most IPOs show some early gains, there are exceptions. Buyer beware!

 

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