Companies That Had Their IPO In 2010

Companies That Had Their IPO In 2010
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A significant accomplishment for most major companies is going public. An IPO is required if you would like to be publicly traded. Additionally, your company’s initial public offering, or IPO, marks the first time that stock shares can be purchased on the stock market.

Most of your favorite businesses may surprise you with how recently they went public. The year 2010 in particular saw a rise in IPOs. Ever wonder which businesses made a big splash when they first opened? Find out more about the top ten businesses that went public in 2010 by reading on.

What Is an Initial Public Offering (IPO)?

An initial public offering (IPO) is the procedure of releasing new shares of stock to the public for the first time by a private corporation. A company can raise equity funding from the general public through an IPO.

Since there is typically a share premium for current private investors, the shift from a private to a public company can be a crucial period that allows investors to realize gains from their investment. Additionally, it enables public investors to take part in the offering.

Note that: 

  • An initial public offering (IPO) is the process of selling new shares of a private company to the general public. 
  • To hold an IPO, businesses must satisfy Securities and Exchange Commission (SEC) and exchange requirements.
  • It allows businesses to raise money by selling their shares on the market.
  • Investment banks are hired by businesses to market products, assess customer demand, determine IPO pricing, and perform other tasks.
  • The company’s founders and early investors can use an IPO as an exit strategy to realize the full return on their private investment.

How Does an Initial Public Offering (IPO) Work?

Early investors and professional investors help a pre-IPO private company grow with a small number of shareholders. A company’s growth and expansion depend on an IPO because it promotes greater transparency and credibility. A business may announce its interest in going public as it develops and complies with SEC rules. During this stage of development, the company can get better rates on borrowing money and broaden its market.

This stage of development typically starts when a business achieves unicorn status or a private valuation of about $1 billion. However, depending on the level of competition and their capacity to meet listing requirements, private firms at various valuations with sound fundamentals and demonstrated profitability potential may also be eligible for an IPO.

Furthermore, as IPO shares are subject to due diligence, underwriting is a critical step in determining their price. Private share ownership changes to public share ownership when a company goes public, making existing shares valuable at the public trading price. Additionally, private investors can profit from this transition and realize the expected returns. Therefore, private stockholders have two options: they can either keep their shares in the public market or sell them to make money.

Overall, millions of investors have the chance to purchase shares in a company and add money to the shareholders’ equity through the public market. The volume of shares sold and the price at which shares are sold have an impact on the new shareholders’ equity value in the company. In both private and public companies, shareholders’ equity is still owned by investors, but in an IPO, it rises significantly thanks to the money raised from the primary issuance.

Important Terms Used in the IPO 

Initial public offerings are characterized by specific terminology, just like everything else in the investing world. You should be familiar with the following key IPO terms:

#1. Common stock: 

This is the ownership stake in a public company that generally grants holders the right to vote and receive dividends from the company. A business sells common stock shares when it goes public.

#2. Issue cost:

This is the cost of common stock, which is sold to investors before an IPO company starts to trade on public exchanges. commonly known as the asking price.

#3. Lot Size:

This is the minimum number of shares that can be purchased in an IPO. You must make an offer in multiples of the lot size if you want to buy more shares.

#4. Preliminary Prospectus: 

This is a report produced by the company conducting the initial public offering that contains details about its operations, strategic plan, historical financial statements, most recent financial results, and management. It is occasionally referred to as the “red herring” and has red lettering running down the left side of the front cover.

#5. Price Band:

This is the range of prices at which the firm and the underwriter will accept bids from investors for IPO shares. Generally speaking, it varies depending on the type of investor. For instance, retail investors like you might be in a different price range than qualified institutional buyers.

#6. Underwriter:

This is the investment bank in charge of overseeing the offering on behalf of the issuer. In general, the underwriter chooses the issue price, promotes the IPO, and allots shares to investors.

Why Should A Company Pursue an IPO?

Although an IPO marks the very first time the public can purchase shares of a company, it also enables early investors to receive a return on their initial investments. Since many initial investors want to sell their shares in new businesses or start-ups, it signifies the end of one stage of a company’s life cycle and the beginning of another. 

Other factors for pursuing an IPO, like raising capital or increasing a company’s visibility in the public, include:

  • Shares can be sold to the general public to help businesses raise more money. The money raised could be put to good use by financing business growth, R&D, or debt repayment.
  • It might be too expensive to use other methods of capital raising, such as bank loans, venture capitalists, and private investors.
  • Companies can receive a ton of publicity by going public through an IPO.
  • Companies may desire the prestige and stature that come with being publicly traded companies, which may also enable them to negotiate better loan terms.

Generally, going public may make it simpler or less expensive for a business to raise capital, but it also complicates a lot of other issues. It is necessary to disclose information, for example, by filing both annual and quarterly financial reports. In addition to having to report actions like senior executives trading stocks or considering acquisitions, they also have to answer to the shareholders.

Top 10 Companies that had their IPO in 2010

#1. Molycorp (NYSE: MCP):

Molycorp, a mining company, got its IPO in 2010, which was followed by a price spike, a four-year decline, and a low initial price. Despite having higher stock prices at year’s end, the company declared bankruptcy four years later. 

Therefore, it is important to Investigate controversies and environmental concerns before investing. Additionally, you ought to get expert investment advice. Compare investment advisors, fees, and user reviews to determine which one best suits your needs.

#2. Theaters (NYSE: AMC (Class A)):

You’ve likely heard of this company if you’ve visited a mall in the past 12 years. Unexpectedly, the motion picture chain is one of the more popular investments for retail investors now that it is a publicly traded business.

AMC Theaters technically had IPO plans for 2004 and 2010. Although their 2013 efforts led to a significant and successful IPO, both IPOs were abandoned.

#3. General Motors (NYSE: GM):

General Motors was a public company years ago, but after bankruptcy and restructuring, it became one of the private companies. The company underwent a restructuring, and soon after, it had another IPO.

With an initial offer price of $33, the 2010 IPO raised more than $20 billion. As a result, it was one of the biggest IPOs in recent memory. Due to this, brokerages continue to view this stock as a blue-chip stock, or a company with strong financial standing that frequently pays high dividends.

#4. Dangdang (NYSE: DANG):

In 2010, one of the largest brands in Chinese business went public. For those who are unaware, Dangdang is among China’s largest e-commerce companies, with its headquarters in Beijing. Despite having most of its markets in Asia, it can compete directly with Amazon.com China.

Additionally, Dandang was popular among F1 students who study in the US because of its global appeal. It remains a favorite among many international students who have access to the Internet.

#5. HiSoft Technology International (NASDAQ: HSFT): 

Another well-known IPO to emerge from China’s markets was HiSoft. The initial offer price for this company, known for its IT outsourcing, was $10 per share.

Although the stock of HiSoft has stopped displaying updates since 2012, it used to trade as Pactera for a while.

#6. Qlik Technologies (NASDAQ: QLIK):

The best-performing initial public offerings (IPOs) to have been made in 2010 may be Qlik Technologies. The current location of this business was originally in Sweden. Their main accomplishments were the development of data integration products like Qlikview and numerous acquisitions.

Despite making it public in 2010, they were later acquired and turned private. However, Qlik had another IPO in 2022, making it one of the select few $1 billion companies to have two separate IPOs.

#7. Green Dot Corporation (NYSE: GDOT):

Green Dot Corporation made a remarkable entrance into the world of publicly traded companies. They were a huge top choice of the year because it is one of the few global financial industry leaders to offer services to those who ordinarily do not have a bank account. The offer price began at $36 per share, even though the company later experienced several scandals (including issues with their product lines being used by criminals). It continues to be one of the more robust stocks to enter trading since 2010.

#8. Tesla (NASDAQ: TSLA):

Tesla, founded by Elon Musk in 2010, has a market capitalization of over $607 billion and debuted in 2010 at $17 per share. In 2022, Tesla stock traded at $193, making it a popular investment choice among traders.

#9. BroadSoft (NASDAQ: BSFT):

CISCO purchased BroadSoft, a well-known VoIP (Voice over IP) service provider, in the 2010s, and now it is managed by CISCO as a subsidiary. Even if they are subsequently acquired, businesses like BroadSoft offer great investment opportunities. A brokerage account is necessary to begin investing in businesses like BroadSoft. 

#10. The Fresh Market (NYSE: TFM):

A rapidly expanding grocery chain from the Carolinas named The Fresh Market went public in 2010 with an initial offering price of $22 and a final end-of-year stock price of more than $40 per share. Apollo acquired the business in 2016, which caused the stock price to soar. Since then, The Fresh Market has remained a secret.

Other companies that had their IPOs in 2010 are: 

CompanyStock ticker symbolOffer dateOffer priceEnd-of-year priceReturn

MolycorpNYSE: MCP7/29/2010$14.00$49.90256.43%
RealPageNYSE: RP8/12/2010$11.00$30.93181.18%
BroadSoftNasdaq: BSFT6/16/2010$9.00$23.88165.33%
Camelot Information SystemsNYSE: CIS7/21/2010$11.00$23.92117.45%

Oasis PetroleumNYSE: OAS6/17/2010$14.00$27.1293.71%
MakeMyTripNasdaq: MMYT8/12/2010$14.00$27.0393.07%
EnvestnetNYSE: ENV7/29/2010$9.00$17.0689.56%
JinkoSolarNYSE: JKS5/14/2010$11.00$20.1282.91%
Noranda Aluminum HoldingNYSE: NOR5/14/2010$8.00$14.6082.50%
SemiLEDsNasdaq: LEDS12/9/2010$17.00$29.0570.88%

E-Commerce China DangdangNYSE: DANG12/8/2010$16.00$27.0769.19%

Higher OneNYSE: ONE6/17/2010$12.00$20.2368.58%
SouFunNYSE: SFUN9/17/2010$42.50$71.5268.28%
InphiNasdaq: IPHI11/11/2010$12.00$20.0967.42%
Sensata TechnologiesNYSE: ST3/11/2010$18.00$30.1167.28%
AmyrisNasdaq: AMRS9/28/2010$16.00$26.6866.75%
Financial EnginesNasdaq: FNGN3/16/2010$12.00$19.8365.25%
Source: IPOScoop.com

How to Buy IPOs

Since not all brokers provide access, buying stock in an IPO involves collaboration with a brokerage that processes IPO orders. Normally, you purchase IPO stock from the underwriter or your broker. Access to IPOs may be available through brokers like TD Ameritrade, Fidelity, and E*TRADE, but you might need to meet certain qualifications, like having a certain amount in your account or making a certain number of trades in a certain amount of time.

However, an IPO stock’s initial offering price is frequently out of reach for retail investors, which drives up prices. By enabling retail investors to purchase specific IPO company shares at the initial offering price, platforms like Robinhood contribute to the resolution of this problem. 

Note that before making an investment in a company’s IPO, you must do your homework.

Is Buying An IPO An Investment?

Investments in IPOs are risky, particularly given the lack of data on private companies. Between 1975 and 2012, more than 60% of IPOs experienced negative absolute returns after five years. For instance, Lyft went public in March 2019 at a price of $78.29 per share, but its stock price fell right away and hit a low of about $21. Other businesses succeed over time but struggle in the beginning, such as Peloton, which started at $25.24 and had a difficult first six months. 

Therefore, buying IPOs is not investing but speculating, as many shares allocated in the IPO are flipped on the first day. If a company is a good investment but not at an inflated IPO price, it’s difficult to get capital back out of it.

Advantages of Getting an IPO 

One of the main benefits is that the company can raise money by accepting investments from the investing public. This makes acquisition deals simpler to complete, improves the company’s visibility, and public image, and boosts profits.

Additionally, a company can typically benefit from more favorable credit borrowing terms than a private company because of the greater transparency that comes with required quarterly reporting. 

Disadvantages of Getting An IPO

The disadvantages of buying into an IPO include: 

  • One of the biggest drawbacks is the high cost of initial public offerings (IPOs), as well as the ongoing and frequently unrelated expenses associated with running a public company.
  • For management, which might be compensated and evaluated based on stock performance rather than actual financial results, fluctuations in a company’s stock price can be a distraction. 
  • The business must additionally reveal financial, accounting, tax, and other company data that could give rivals an advantage.
  • Maintaining capable, risk-taking managers may be more challenging if the board of directors has rigid leadership and governance. 

What Is the Purpose of an Initial Public Offering?

Large companies typically use IPOs as a means of raising money by selling their shares to the general public for the first time. Shares of the company are traded on a stock market after an IPO. 

Therefore, one of the main reasons for conducting an IPO is to raise money through the sale of shares, to give company founders and early investors liquidity, and to benefit from a higher valuation.

Can Anyone Invest in an IPO?

Yes, anyone can invest in an IPO, but new IPOs will frequently be in higher demand than they are available. There is therefore no assurance that all investors who are interested in an IPO will be able to buy shares. Therefore, those who are interested in taking part in an IPO may be able to do so through their brokerage company, though sometimes access to an IPO is only available to a firm’s more significant clients. 

Is Buying An Ipo A Good Investment?

Due to their erratic price movements during and after the IPO, IPOs are popular with investors and garner media attention. Therefore, investors should evaluate each IPO based on the prospectus of the company, its financial situation, and their level of risk tolerance.

How Are IPOs Priced?

A company must list an initial value for its new shares when it goes public. The underwriting banks that market the IPO are in charge of this. The basics and growth prospects of the company play a significant role in determining its value. 

Since IPOs might come from relatively young businesses, they might not yet have a demonstrated history of profitability. Comparables may be used in its place.  

How Much Is an IPO?

When an investment bank lists a company, underwriting fees are assessed. The single biggest direct expense for an IPO is underwriting fees. According to over 1,100 companies’ public filings, costs to companies range from 4% to 7% of gross IPO proceeds on average.

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References:

Fidelity 

Forbes

Investopedia

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