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One of the functions of a secular bear market is that you see a massive shift in psychology as stocks inevitably get mauled every few years. A symptom of that can be seen in the IPO market, which was once seen as the epitome of free money to traders who bought even if they did not get in before the launch. Recently, we have seen a string of IPO’s that have been more or less universally hated, such as LNKD P and GRPN. Even IPO’s like DNKN have been ripped due to excessive valuation.
The most common criticism seems to be: “I really like listening to Pandora/drinking Dunkin’ coffee/getting LinkedIn spam-mail/dorking out on cool Groupon’s, but I would NEVER buy the stock.” There will always be cynics, often with valid arguments, and there were still a fair amount back in the dot-com era. However, the negativity surrounding IPO’s is far more pervasive nowadays, which again is all part and parcel of a secular bear market.
With that in mind, you can see how lethargic the price action has been in virtually all of the recent IPO’s since their initial launch. There is no euphoria to worry about like there was ten years ago because we are dealing with apathy and disgust for these businesses. Accordingly, opportunities will missed. In particular, Pandora has been a dud since its IPO on the level of Ryan Leaf or Todd Marinovich. That said, it has settled into a tight symmetrical triangle as volume has tapered off. With price nearing the apex and no one talking about Pandora’s stock anymore, I am watching this for a move about $15.65 and then $16 for a bonafide post-IPO breakout.
IPO’s may not be all fun and games like they used to be more than a decade ago, but under the radar plays dismissed as irrelevant will be where the opportunities are at rather than tulip bulb IPO’s going up 100% a day.
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