The Mood of the Market
The IPO market is picking up. Initial public offerings (IPOs) are when companies first sell their shares in the stock market. I track IPOs because it gives me a heads-up on the mood of the market.
When you have IPOs coming, it tells you that people are in the mood to put money into the stock market and, specifically, into the riskiest part of it. That’s because most IPOs are of young companies with very little operating and trading history. So, I have taken note of what’s going on now in the IPO market.
The IPO market peaked most recently in 2014 with 275 offerings. From there it slumped to just 105 offerings in 2016 … a 62% decline.
However, 2017 is looking better. Already in January there have been three IPOs versus zero at this time last year.
And Renaissance Capital, a firm that tracks and researches IPOs, shows that another five are expected by the end of the month. That’s a good sign for the IPO market — and for the stock market in general — because it shows that people are willing to put money to work in companies that are considered risky.
Editor, Profits Unlimited