The summer doldrums may be a Wall Street myth. As the rest of the world thinks about summer's diversions, IPO players are getting down to serious business. Twenty-six deals are to be priced during the week of July 19. The estimated volume for that week totals nearly $2.57 billion. After that, the pace appears steady, with another 25 or so deals slated for the week after that.
Of the deals for next week, half of them carry an opening consensus premium of A or A+. In other words, these offerings are expected to start trading two points or higher above their offering prices. A few could soar into the IPO Hall of Fame with opening-day gains of 100 percent or more. And this is supposed to be the summer doldrums?
Despite folklore that Wall Street gets hit by such doldrums, the numbers don't support this belief. According to The IPO Aftermarket, 5,138 IPOs were underwritten from 1990 to 1998. During the summer months -- defined for our purposes as the months of June, July, and August -- of the 1990s, 1,354 new issues came to market. That means that 26.4 percent of all offerings during this decade came during the summer months. That is slightly above average.
This trend appears to hold up over the last couple of years, except for the market ugliness in August of last year. In June 1998, 57 deals were priced. In July 1998, 50 deals were priced. But during the month of August, the markets got crunched by the bears; the Dow Jones Industrial Average lost 15 percent, and the Nasdaq Composite got thumped by almost 20 percent. Only 19 deals priced during that month. To compare, look back to August 1997, when there was no such market correction; 47 IPOs were priced then.
Whatever else is said, the financial markets are driven by greed, and greed knows no season.
For details of the week's hottest offerings, see our charts page.
PICKS OF THE WEEKThe Art Technology Group builds products designed to help businesses manage and build customer relationships over the Internet. The company is located in Boston, Massachusetts. IPO handicappers expect the stock to open to a five-point premium over its offering price.
Gadzoox Networks provides hardware and software products for storage area networks, or SANs. The company claims that it pioneered the development of SANs by applying a networking model to the connectivity of enterprise servers and storage devices. The company is based in San Jose, California, and IPO experts project an opening premium of about $5 a share.
HealthGate Data, located in Burlington, Massachusetts, is an Internet provider of health care information for physicians, other health care professionals, patients, and health-conscious consumers. Although it's not expected to be a Drkoop.com, which gained 82.6 percent on its opening day, the stock is still expected to soar after being priced. Consensus is for a pop of about five points.
InsWeb brings insurance to the Web. The company brings customers and more than 30 insurance companies together over the Internet. InsWeb is located in Redwood City, California. IPO handicappers believe the IPO could be one of the week's big winners. Some see a $10-a-share or higher opening-day gain.
San Diego-based MP3.com is considered by some to be the leader in the e-music industry. People can search, sample, and download music free of charge. The site offers consumers over 100,000 songs from over 18,000 artists, while giving performers the opportunity to distribute and promote their music. The offering has already been increased in size considerably from 9.0 million shares at $9 to $11 each to 12.3 million at $16 to $18. Some IPO pickers think the deal could open up $10 a share or more when it starts trading.