Friday was a busy day for tech companies on Wall Street, with GrubHub, Five9, and IMS Health going public on the same day. It went well: GrubHub spiked 30.77%, Five9 9.14%, and IMS Health 15%. A good crop, you could say.
On the other end of the stick, a number of young-ish, but already public technology companies took it on the nose: Facebook fell 4.61% on Friday, while Twitter gave up 2.07% and Yelp fell 6.87%.
Those drops, while steep, are not the only declines those firms have experienced recently. Facebook, ending the week at $56.75 is down from a 52 week high of $72.59. Twitter currently rates $43.14 per share, far under its 52 week high of $74.73. Yelp trades for $65.76, again deeply beneath its 52 week peak of $101.75.
Commentary has been heavy on “momentum stocks” in the tech sector, with fair enough reason: The NASDAQ is riding high, pushing valuations up across the sector, helping a busy IPO calendar. The getting is good at the moment, as the most recent IPO cadre demonstrates, and so investors are trying to get.
There isn’s a single uniting reason for the declines. Twitter’s slow sequential-quarter user growth was its downfall. Yelp is in some legal trouble. And Facebook appears to have tracked down on a dearth of news. Kidding, of course, it recently got into the VR game.
Despite slipping luster on the larger firms, the Street appears amply open to letting new firms hit the market. This could bode well for Box, a money-losing storage cloud storage company that is seeking up to $250 million in an upcoming public offering.
The market is not all roses for new offerings: Keep in mind that the massively profitable King Digital has fallen from its recent IPO price, mostly on investor fear concerning its future growth potential.
Still, Twitter, Facebook, and their brethren are held in high esteem by the market. Facebook’s current trailing twelve month PE is nearly 100. For now, however, high flying firms are having their wings clipped as smaller players look to take flight.