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IPOs - are they worth it?

Initial Public Offerings (IPO), or just Public Floats. Call them what you want.
Are they really worthy of consideration by the average investor?
Or is your money better off somewhere else?
You might be surprised at how often a public float flops.

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Skip the introductory text and go straight to the charts below

List of Stocks
shown further below

AIO - Asciano
AMP - AMP Limited
BAP - Bapcor (formerly Burson)

BLY - Boart Longyear
BCS - BrisConnections
DSH - Dick Smith
EHE - Estia Health Limited
FB -  Facebook
FLN - Freelancer
GFY - Godfreys Group Limited
HOT - Hot Copper
ISU - iSelect
MPL - Medibank Private
MYR - Myer
NXT - NextDC
NEC - Nine Entertainment Co
OFX - OFX Group (formerly OzForex)
OML - oOh!media Limited
PYL - Phytotech Medical
QRN - QR National
SLK - Sealink Travel Group
TLS - Telstra
TWTR -Twitter
VED - Veda Group Limited
WLD - Wellard Limited
XRO - Xero Limited

More Information

Wanting to utilise technical analysis to study the historical prices in order to take advantage of rising trends? Rather than participate in an IPO and hope that the price will rise? See more information about Technical Analysis.

For some ideas about investing strategiies, see Brainy's eBook (PDF) Articles on strategies.
 

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A personal experience

This particular analyst and commentator had a personal experience with an IPO in the early 1990s. With an interest in wine, and the pending float of Coldstream Hills winery (Yarra Valley), it seemed to be a good idea to participate and buy $500 worth of shares. If nothing else, it was thought to be a good experience at dabbling in the market.

Well, it was a fun experience to participate, and to be a real shareholder. But it was a total waste of money. The shares never went anywhere, and the company never paid a dividend. And the company was eventually swallowed up by a much larger wine making company (compulsorily acquired).

Financially? This experience was an important lesson. A $500 parcel was not a serious amount. Be prepared to lose some or all of the money. If we are truly serious about financial returns, the money can sometimes be better off in the bank (either in a bank account, or invested in a bank) - and this is NOT advice!

 

Research papers

  1. McDonald and Fisher, 1991.
  2. Logue, 1973; "On the pricing of unseasoned equity issues: 1965-1969", Journal of Financial and Quantitative Analysis 8.
  3. Ibbotson, 1975; "Price performance of common stock new issues".
  4. Ritter, 1984; "The 'hot issue' market of 1980".
  5. Ibbotson, Sindelar and Ritter, 1988; "The Market's Problems with the Pricing of Initial Public Offerings" and another version.
  6. Ritter, 1991; "The Long-Run Performance of Initial Public Offerings".
  7. Ritter and Welch, 2002; "A Review of IPO Activity, Pricing, and Allocations".
  8. Loughran and Ritter, 2002; "Why Has IPO Underpricing Changed Over Time?" and another version.
  9. Santos, Francisco, 2010, "IPO underpricing and long-term underperformance".
  10. Ahmed S. Alanazi and Benjamin Liu (Griffith Business School), 2013; "IPO financial and operating performance: Evidence from the seix countries of the GCC".
  11. Nurwati A. Admad-Zaluki; 2008; "Post-IPO Operating Performance and Earnings Management".

Introduction

One way that retail investors can participate in the share market is to take part in a public float (an IPO - Initial Public Offering - or a subsequent new retail offer float after a re-organisation in the hands of a private equity company, for instance). Some of the higher profile floats of recent years include:- Telstra (with their T1, T2, and T3 offerings), Myer (2007), Asciano (AIO, 2007) and Dick Smith (2013). 

Some of the overseas high profile floats in recent years have included: Apple (AAPL in 1980), Google/Alphabet (2004), Amazon.com, Facebook (2012), Twitter, Chipotle Mexican Grill (NYSE:CMG, 2006, and the UK Royal Mail (2013). With floats like these, many investors were wondering how to get involved. It is so easy to get swept up in the hype that surrounds the initial share market listing of a high profile company - but will it be profitable or not?

With the GFC way behind us, and the credit cycle easing (in 2015-2016+) there is more company merger and acquisition activity, and there are more and more IPOs.

In late 2014 we saw the Medibank Private (MPL) float in late November and Estia Health Limited (EHE) and Godfreys Group Limited (GFY) in early December. They looked promising at the time, but were they successful?

Are we serious about increasing our wealth? or
are we happy to lend our investment capital
to a company so that they might never give it back?

A cursory review of IPO performance shows that for roughly half of Australian IPOs, the share price tends to be less than the listing price for at least several months after listing (this also applies to many overseas markets). One thing to watch for is the activity where some people participate in the float with the clear intention of selling into the hype within the first few days - for what is known as a stag profit. This sort of activity was hinted at in the first few days of the Asciano (AIO) float in 2007. 

Should we invest in a public float?

The material below includes some key discussion about IPOs, with some samples of high profile IPOs and their share price performance from recent years showing their price charts, with some being successful, and some not. You can skip this introductory text and go straight to the charts further below.

Upcoming and recent public floats

If you are really interested in the upcoming (Australian) IPOs, the ASX maintains a list on their official web site: www.asx.com.au/prices/upcoming.htm. Also see: www.investsmart.com.au/Floats/Upcoming.

And recent float details here: www.asx.com.au/asx/research/recentFloats.do

How it works - the real reality

Exactly how does an Initial Public Offering (aka. public float) work?  Well, there are many good sources of this information on the internet, so we won't spend time on it here. What we will spend time on is what all the experts don't tell us about IPOs.

It is important to remember a couple of things about the IPO process. To participate in the IPO itself, we can complete the paperwork to buy a nominal number of shares, at a given price or at a price that is to be determined. When the time comes, we might, or we might not, receive the number of shares we requested. The share issue can be over-subscribed resulting in the number of shares issued to each investor being scaled back.

Then at some time later, the shares will commence trading on the open market, and on the first day of trading the share price might trade higher or lower than the issue price (ie. the original offer price). And in fact it might be a long way above or below the issue price. As time goes by, the share price could then go any where - up or down - and by significant amounts.

But how can the share price justifiably move up, or down?

To understand why these things happen, we need to remember that the traded share price on the open market is a reflection of the personal opinions of the market participants. Each of them might have done some calculations to estimate the real value of the shares; but it is only their opinion, which may differ markedly to everyone else's opinions. This is where some investors get carried away with their opinions about the company and their opinion about fair value for the shares. It is dangerous to our investment capital to become emotionally attached to any shares.

Now, what about instalment receipts (ie. partly paid shares)? In an IPO it is possible for the company to float their shares by asking for the share price to be paid in instalments. That is, to make an initial deposit, and pay the balance in one or more future instalments (which might, or might not, be optional payments). Telstra used this process, as did the Stadium Australia group (to build the Sydney Olympic Stadium - incorporated in 1996, floated in 1997, operated, then delisted as Stadium Australia Group (SAX) in 2007). Read a little news about this listing saga.

BrisConnections also used the instalment receipts process except that the instalment payments were NOT optional. This caused a big problem for BrisConnections investors because the trading price of the initial shares on the open market fell considerably, and they had the future payment obligation attached (unbeknown to many of the market participants).

Skip this introductory text and go straight to the charts below.

Why might we participate in a public float?

The average retail investor might want to participate in a public float (an IPO) for a number of reasons, such as:

  1. To make a capital profit over a period of time (ie. an increase in share price, assuming it will increase).
  2. To earn income from their (promised) dividend payments.
  3. To express an interest in, or to support, a particular venture.
  4. To be involved in the company and its dealings.
  5. Because the investor genuinely wants to lend money to the organisation.
Of these few reasons in favour of participating in an IPO, some of them are based on financial reasons, with a degree of anticipation or hope. In reality, though, there are a number of good reasons why an investor should NOT participate in an IPO (see 5 reasons here). It is easy to find more reasons (on the internet) not to participate.

Should we participate in a public float or not?

The practising technical analyst who closely follows the share price charts would probably not participate in public floats, instead waiting to see a confirmed uptrend in the historical share price before risking hard-earned capital. If there is no price chart history - there is no price trend - so no investment - and minimal risk. 

Of course, this Share Market Toolbox web site contains no advice, and we should always defer to a properly qualified and licensed individual who might be able to advise in an unbiased manner as to whether an intended investment is suitable for our own personal circumstances.

In reality, taking up an offer in a public float is guessing and wishing!

We need to remember that when an IPO comes to market, there is an initial offer price set. And this offer price can be arrived at in a number of different ways, meaning that there will be a number of different possible float prices. This is possible because many assumptions need to be used in the pricing model, and it is very dependent on the estimates of forward earnings. One might expect that the offer price will be close to the intrinsic value (which can be argued is merely educated guesswork).

The final offer price can be influenced by a number of things. When the company managing the float approaches the institutional investors to seek their interest, if there is a lot of interest then the offer price can be pushed upwards as the different parties basically bid higher and higher prices in order to participate. However, if there is little interest, then the offer price can be somewhat subdued. (This is the basic economic principle of supply and demand.)

Then when the shares are floated and they start trading on the open market, the amount of real interest for those shares in the market place can push the share price higher, or a lack of interest will pull it lower. And this depends on a number of things such as the number of float participants who are keen to sell their allocated shares for whatever reason.

So, depending on a number of circumstances, the share price might go up or down after listing. And nobody will be able to accurately predict this in advance - that is, absolutely nobody can predict this, not your broker, nor adviser. So any participant who wants to see their investment capital improve will be simply hoping that it does. This is totally unlike using a structured discipline like technical analysis to identify a rising trend - remembering that a confirmed trend is likely to continue.

Skip the rest of this introductory text and
go straight to the charts below.

IPO performance - empirical studies

Over the years a number of empirical studies have been done to examine two key observations:- IPO under-pricing, and IPO long-term under-performance. The two consistent conclusions from the studies are that:

  • Many IPOs are under priced. That is, the first few days of trading tend to be at prices higher than the issue price. Now this might be good for those who participate in the IPO, and then sell at some stage for a nice profit. But participating in the IPO is a gamble because the shares might trade below the issue price.
  • Many IPOs under-perform both the market and their industry peers in the months following the IPO. In this case, it is clear that this is a good way to destroy investment capital.

For information about the research, see the links at right "Research papers".

IPO performance - actual results

Here are a number of research reports into the actual results of public floats over the years:

  1. IPO Eye - An overview of 2014 (London).
    Download the report from EY.
    See more IPO reports and information from EY.com.
     
  2. AVCAL - IPO performance analysis, 2003-2014 (min offer size A$100m).
    See the details and download the report from the AVCAL web site (or see the report here).
    (AVCAL - Australian Orivate Equity & Venture Capital Association Limited).
     
  3. EY Global IPO Trends (2014 Q2).
    Download the report from EY.
    See more IPO reports and information from EY.com.
     
  4. Pitcher Partners - Queensland IPO Study (November 2013)
    Download the report from Pitcher Partners.
    (See more download information from Pitcher Partners).
     
  5. See a list of Recent IPO performances at 123jump.com.
     
  6. Recent IPO performance on the Nasdaq - 5 Best/Worst IPO Performers in the 6 months.
     
Note:- Some of these reports make reference to PE-backed floats, where PE refers to Private Equity (not PE Ratio).

By the way...

It has been quoted in the press (November 2013) that a wise broker once said the difference between a hand grenade and a company float is that the average investor has enough sense to throw the hand grenade away. (Source: www.afr.com, November 2013 - might require AFR login access).

Conclusion

Based on the evidence, the chances of an IPO returning positive capital growth in the short to medium term seem to be low (below 50 percent). It can be argued that to best protect investment capital one should seriously consider avoiding the IPO. For a personal experience, see the short story at right.

About the price charts below

The price charts below include a number of samples of IPO performance in the short term (soon after listing) and in the long term (over months or years). Of course, it is easy to suggest that these charts are a selective collection to support the argument. However, they are intended to demonstrate some real examples of what has happened in the past - whatever has happened before can happen again.

More information

For more information on this topic, see the list of references in the column above right...



Share price performance after the public float

A collection of price charts in (reverse) chronological order,
showing some positive and negative stories regarding high profile IPOs.

Toolbox Members click on any chart image for a larger version in a new window.
Stock code,
float/listing date,
and details
The first few weeks or months and
a line chart and/or a candlestick chart
The candle chart is useful as it shows the range in price in each period.
Note that these charts might NOT show the latest price action as they attempt
 to show whether investing in the IPO might have been useful in the medium term.
Longer term chart

Hot Copper (HOT)

http://investors.hotcopper.com.au
15 September 2016 (11am)
Offer price: $0.20

First day:
  • Open: $0.23
  • Low: $0.225
  • High: $0.27
  • Close: $0.265

Note: An hourly candlestick chart summarises the price action for each hour.













HOT - The first two days only
(hourly* candle chart)

NOTES:

On day 1, in the first hour of trade (from 11am), the share price opened at 23c, above the issue price of 20c. For the rest of the day, in each hour, th eprice moved hogher to close the day at 26.5cents.

Day 2 - High volume with a black candel as sellers took profits. Price stayed mostly above 24c during this day. Volumes mostly lower each hour, and the number of trades each hour below 20 (ie. max of one every three minutes, suggests not a lot of interest).

Day 3 - No trade in the first hour.

* - An hourly candlestick chart summarises the price action in each hourly period.


HOT - The first few weeks
(daily* candle chart)

NOTES:

From day 2 onwards for 6 days, the trading was within the range of the first day, and progressively lower.

Trading on Monday 26 Sept fell below the previous trading range but stayed above a floor (a support level) of 21cents.

The overall price trend on this chart is down, with a Lower Peak on 30 Sept (the high of the daily candle), and a Lower Trough on 26, 27, and 28 Sept (the lows of the three candles). Read more about price trends.


HOT - The first 6+ months
(weekly* chart)

NOTES:

On this chart we can now see a confirmed downtrend, with a sequence of lower peaks and lower troughs.

For about 5 weeks through December 2016 and into January 2017 the share price hovered around the IPO float price level of 20 cents, before continuing its movement lower.

Note the number of weekly trades in the bottom pane is less than 30 trades per week from mid-November onwards. Many trades look for more than 50 trades per day.



Wellard Limited

www.wellard.com.au
10 December 2015 (12pm)
Offer price: $1.39

First day:
  • Open: $1.39
  • Low: $1.31
  • High: $1.39
  • Close: $1.39
This case study sample is a classic example of how there were several warnings about potentially lower prices ahead, and investors could have cut losses, and protected capital, by closing a position. Make sure to read the comments at right about  each of these three price charts.

As at early October 2016, WLD shares are more than 80 percent below their issue price. So $10,000 invested at IPO time was now worth  only $2,000 - that's a reduction of $8,000. It doesn't seem to make sense to hold on for this long in the hope of a turn around - that mind set is for the big guns with lots of money (the fund managers who manage other people's money).

See latest price chart at ASX.com.au.

June 2016, news in The Age:-
Cattle exporter joins list of worst IPOs this year

* - A daily candlestick chart summarises the price action for each day. A weekly chart summarises thte price action for one week, and shows the high for the week, the low for the week, and the open and close prices for the week. Read more about candlestick charts.

WLD - The first 18 days
(daily* candle chart)

The first candlestick is very telling - it closed at the open price for the day ($1.39), but traded as low as $1.31 on rather high volume (compared to the following days). This candle is a Dragonfly candle, and shows the presence of sellers during the day who were over-powered by the weight of buyers.

However, over the next 5 trading days the share price made lower highs each day. Then for the next 11 trading days the share price was stuck in a narrow range between $1.39 (the float price) and a low of about $1.35 (a support level). Investors were not sure whether to support higher prices by buying more, or to sell.

The answer came on 6th January with trading below the $1.35 support level, on volume that was higher than most prior days.

We also notice on this chart that the daily volume and daily trades values were high enough to make this a liquid stock and able to be traded on the basis that a sell order would probably be filled quickly. (Read more at Stock Liquidity.)

* - A daily candlestick chart summarises the price action for each day.


WLD - The first three months
(daily* candle chart)

After falling below the initial support level of $1.35 on 6th January, then next few candles are mostly Big Black ones, with a very bearish Big Black candle on very high volume on 11 January. The price settled at  the close on 12 January at $1.10 - this was the lowest level for the price for some time to come.

The share price then rallied through January to just under the float price, and again traded in a narrow range for 9 days, with a new support level at about $1.32. Then on 8th February it again fell below this support to sit above $1.13 - a new support level.


WLD - The first 10 months
(weekly* chart)

The price action described at left in the two daily charts is covered on the above weekly chart in just the first 11 candles. After that, the share price continued the fall that it started on 8th February, and paused the fall above 67 cents in early April. A red dotted line is drawn on thie chart above the price action to indicate the confirmed downtrend (a sequence of lower peaks).

The astute technical analyst probably exited the position during this downtrend, because of the belief that a confirmed downtrend is liekly to continue until it is confirmed to be over (refer one of the six tenets of Dow Theory).

For any investors who held on further, another sell-off took place over three weeks in May/june, and then another in August. There were plenty of opportunities to cut losses and close a position.

Also see latest 3 month chart
at www.bigcharts.com:

click for a larger version
in a new window

Phytotech Medical Limited (PYL)

Since July 2015:
Known as MMJ Phtotech Limited.
www.mmjphytotech.com.au

22 January 2015 (2pm)
Offer price: $0.20

First day:
  • Open: $0.32
  • Low: $0.305
  • High: $0.42
  • Close: $0.41

Note: An hourly candlestick chart summarises the price action for each hour.

July 2015: Phytotech Medical merged into MMJ to become MMJ Phytotech Limited.




PYL - The first two days only
(hourly* candle chart)

An hourly chart showing just the first two days of trading - a winner from day one

* - An hourly candlestick chart summarises the price action in each hourly period.


PYL - The first few weeks
(daily* candle chart)

27 February 2015 update - This daily price chart (also showing volume in the middle pane and Trades in the lower pane) clearly shows the strong price run in the first 2 days of trading (up to about 80 cents), followed by the slump back below 30 cents by 9th February. For the rest of February, the price has traded within the range of about 31 to 43 cents. Still well up on the issue price.


PYL - The first few months
(daily chart)

10 June 2015 update - This latest price chart continues to show the small trading range, but at lower levels than back in February. Except for one price spike to 34 cents on 28 June, the price has traded within the range of 26.5 to 33 cents tops. This is still above the issue price, but any investor who has been holding on has missed out on other investment opportunities. Also note that the high daily volumes (and trades) of the first few weeks have now dissipated, and in fact the number of daily trades has fallen below the 50 per day level.


oOh!media Limited (OML)

www.oohmedia.com.au
17 December 2014 (12pm)
Offer price: $1.93

First day:
  • Open: $1.89
  • Low: $1.80
  • High: $1.90
  • Close: $1.90

Note: A daily candlestick chart summarises the price action for each day.

See latest price chart at ASX.com.au.

Updated: 10 June 2015

Update 4 October 2016:- Now this stock has been a winner. The last chart at right shows the share price up to a peak of around $2.70. Since then, the price continued to rally to a peak about $5.50 in August 2016. That's an increase of about 180 percent (or 88 percent per annum annualised).




OML - The first few days only
(hourly* candle chart)

An hourly chart showing just the first 6 days of trading - below, then above, and below, the issue price.

* - An hourly candlestick chart summarises the price action in each hourly period.


OML - The first 4 weeks
(daily* candle chart)

9 January update - The share price has traded in a rather small range up to 5 percent above the issue price. We have now included in the Daily Trades in the lowest pane of the chart, and showing that it has been trading at less than 50 times per day on most days (which for some traders makes it illiquid - see more details about stock liquidity).

* - A daily candle chart summarises the price action each day.



OML - The first few months
(daily chart)

June 2015 update - The share price initially went no where for a few weeks, and then shot up about 30 percent in the next month. Since early March it has mostly traded sideways until the short term run in early May, and has recently fallen away from that high. Nonetheless, it has been up, and is still up, about 30 percent from the issue price.

Also see latest 3 month chart
at www.bigcharts.com:

click for a larger version
in a new window

Godfreys Group Limited (GFY)

www.godfreys.com.au
10 December 2014 (12pm)
Offer price: $2.75

First day:
  • Open: $2.88
  • Low: $2.78
  • High: $2.88
  • Close: $2.85

Note: A daily candlestick chart summarises the price action for each day.

See latest price chart at ASX.com.au.

Updated: 10 June 2015
 
Update 4 October 2016: The last share price shown in the right hand chart was in June 2015, and the stock was up on the issue price. However, by October 2015 the price fell heavily below a support level of about $2.90 (chart not shown here). By February 2016 the share price was down into a trading range of between $1.00 and $1.20. Then by September 2016 it was down under 85cents. This is another stock were it was initially a winner, but turned into a capital killer, and in hindsight should have been sold off to protect capital.


GFY - The first few days only
(30 minute* candle chart)

Trading well above the float price from day one.

* - A 30 minute candle chart summarises the price action in each 30 minute period.


GFY - The first 5 weeks
(daily* candle chart)

9 January update - The share price continued to trade in a very small range until early January when it took off to end up 16 percent higher on 9 January. We have now included in the Daily Trades in the lowest pane of the chart, and showing that it has been trading at less than 50 times per day (which for some traders makes it illiquid - see more details about stock liquidity).

* - A daily candle chart summarises the price action each day.



GFY - The first few months
(daily candle chart)

June 2015 update - An investor in this IPO could have sold their stock in early March for at least a 20 percent gain. Anyone who has held on until the latest date on this chart (9 June) would have seen the value stagnate for the last 3 months. Also, we can see in the bottom pane of the price chart "Trades" that the number of trades each day is below the 50 level, so that it's viability as a liquid and tradeable stock would have to be questioned.

Also see latest 3 month chart
at www.bigcharts.com:

click for a larger version
in a new window

Estia Health Limited (EHE)

www.estiahealth.com.au
5 December 2014 (12pm)
Offer price: $5.75

First day:
  • Open: $4.98
  • Low: $4.71
  • High: $4.99
  • Close: $4.74

Note: A daily candlestick chart summarises the price action for each day.

See latest price chart at ASX.com.au.

Updated: 5 June 2015

NOTE (October 2016): The share price peaked in November 2015 (not shown in the charts here) at about $7.80, then commenced a clear downtrend to a pause in June to August 2016, then it fell off a cliff in August 2016. At last glance it was trading between $3.00 and $3.50, which is well below the issue price. The lesson here is that if a downtrend is confirmed, then consider liquidating to lock in profits and protect the capital from further possible downside. There is no point holding on forever. See the latest price chart far right.


EHE - The first few days only
(30 minute* candle chart)

Trading well below the float price from day one, and after one week is about 18 percent below.

* - A 30 minute candle chart summarises the price action in each 30 minute period.


EHE - The first 3 weeks
(daily* candle chart)

9 January update - The share price has continued to trade in a consistent range about 5 percent below the issue price. We are also showing the number of trades each day, with recent values between about 100 and 500, which makes this a liquid stock (for some traders - see more details about stock liquidity).

* - A daily candle chart summarises the price action each day.


(price chart pending)
EHE - The first few months
(daily chart)

June 2015 update - This stock has trended higher fairly consistently since the lows of December-January. It finally pushed above the issue price in February, and retreated back to sit on that price in April. Overall - it has not been very profitable yet.

 

Also see the latest 6 month chart
at www.bigcharts.com:

click for a larger version
in a new window

Bapcor (BAP)

www.bapcor.com.au
(formerly known as Burson Group, renamed in 2016)
 
24 April 2014 (12 noon)
Issue price: $1.82
First day: Close $2.05
 
*Note: A candle on a daily candlestick chart summarises the price action for each day, and each candle on a weekly candle chart summarises the price action for one week.

See latest price chart at ASX.com.au.
 
 
 
 



BAP - The first3 months
(daily candle* chart)
 
Observations:

Up for a few days, then down to about the issue price before consolidating at that level for about 10 days while investors contemplated protecting their capital by selling. Once all sellers at that level were satisfied, the price rallied to above the issue price and consolidated again (more contemplation by investors).

BAP - The first 12 months
(weekly candle chart)
 
Observations:
After about 4 months the price plateaued and consolidated for about 24 weeks before rallying further. Investors appear to have been contemplating whether a higher price could be justified.

BAP - Almost 3 years
(weekly chart)

Observations:
More than two years since listing, the price peaked at about $6.50 (about 240 percent increase); but fell away in Sept-Oct 2016 and consolidated again (under $6). Even so, still a nice profit.

Medibank Private Limited (MPL)

www.medibank.com.au
25 November 2014 (12pm)
Initial indicative range: $1.55 to $2
Offer price for retail investors:
$2.00
Offer price for institutions: $2.15

First day:
  • Open: $2.22
  • Low: $2.14
  • High: $2.23
  • Close: $2.14
This float would have to be the biggest, most talked about float in 2014. The public offering was well over-subscribed, with the allocation to retail investors scaled back.

Note: A daily candlestick chart summarises the price action for each day.

See latest price chart at ASX.com.au.

Updated: 5 June 2015

Update 4 October 2016:
The share price finally broke above the $2.50 level in March 2016 (not shown on a chart here) to trend higher to a peak above $3.20 in May-June 2016. However, the share price gapped lower in August 2016 and down-trended to under $2.50 in late September 2016.




MPL - The first few days only
(10 minute* candle chart)

Trading above the retail float price, but hovering around the institutional price (hence some fund managers are not happy).

Trading in the first 3 days (at about $2.20) was above the institutional float price; but with black candles indicating a tendency to move lower.

* - A 10 minute candle chart summarises the price action in each 10 minute period.


MPL - The first 7 weeks
(daily* candle chart)

9 January 2015 update - Since the last update below, the share price has moved higher to be about 20 percent above the (retail) offer price, and is also well in the money for the institutional investors.

26 December update - For the first two weeks of trading, the share price hovered around the $2.15 level - the institution's offer price. Then in the last hour of trading on 8th December, a larger number of shares traded hands, pushing the price above the recent trading range. After another week, the price has rallied strongly on the Christmas Eve trading half day (trading ends at 2pm on Christmas Eve).

* - A daily candle chart summarises the price action in each hour.

(price chart pending)
MPL - The first 6 months
(daily chart)

June 2015 update - MPL formed a Double Top pattern in February, and started trending down, and is now below the institutional issue price, and not much above the retail offer price.

Also see latest 6 month candle chart
at www.bigcharts.com:

click for a larger version
in a new window

Nine Entertainment Co (NEC)

www.nineentertainment.com.au
6 December 2013
Offer price: $2.05

First day:
  • Open: $2.02
  • Low: $1.975
  • High: $2.07
  • Close: $2.98
Note: A daily candlestick chart shows the range in price during each day.
NEC traded below the issue price for several weeks, then moved higher (with an indication of buyer support reflected in the breakout candle).
See latest price chart at ASX.com.au.

Updated: 31 July 2014

Update 4 October 2016: The downtrend shown on the last chart at right from a peak in April 2014 continued into January 2015 to see a low of about $1.65. After a recovery, the share price ended up falling to lows of under $1.00 in August 2016. This is another example of how any investors who "believed in the company" and held on for the longer term have seen their capital diminish.


NEC - The first 6 weeks
(daily line chart)

NEC traded below the issue price
for several weeks, then moved
above the issue price.

NEC - The first 3 months
(daily candle chart)

NEC turned up above the offer price
after several weeks.

(Toolbox Members click on the chart
for a larger version)

NEC - The first 8 months
(daily chart)

After 8 months of trading, the share price fell away from March-April highs
back to the issue price.

Also see latest 3 month chart
at www.bigcharts.com:

click for a larger version
in a new window

Veda Group Limited (VED)

www.veda.com.au
5 December 2013
Offer price: $1.25

First day:
  • Open: $1.74
  • Low: $1.63
  • High: $1.78
  • Close: $1.75
Note: A daily candlestick chart shows the range in price during each day.

See latest price chart at ASX.com.au.

 
Update March 2016:
Referring to Chart VED#4 at right, we can see from the end of the chart VED#3 the share price rallied back up towards the $2.50 peak it had already reached back in March 2014, then traded sideways between $2.15 and $2.50 until August 2015. At that point the price fell sharply to hit $2.00 in mid-September 2015, then spiked to above $2.60 (on 18 Sept 2015). It then rallied slowly higher to $2.82 where it entered a trading halt on 11 February 2016 due to a takeover by Equifax Inc.
 

VED - The first few weeks
(daily line chart)

Veda has traded well above the
issue price for at least the first
few weeks.

VED - The first few weeks
(daily candles)

Chart VED#3
VED - The first 8 months

(daily candles)
Even after a downtrend from March to July, stock is still 47 percent above issue price.


Chart VED#4
VED - All price action
(Weekly candles)
(Dec 2013-Feb 2016)
 

Dick Smith (DSH)

Company now delisted
see details at www.delisted.com.au

Floated: 4 December 2013
Offer price: $2.20

First day:
  • Open: $2.28
  • Low: $2.16
  • High: $2.32
  • Close: $2.20
Note: A daily candlestick chart shows the range in price during each day.

NOTES:

With reference to the Chart DSH#4 at right, we note that after the share price had traded above a support level of about $1.92 for many months, the Big Black candle on high volume in August 2015 was the start of a final downtrend. 

The Downtrend line sitting above the share price on the chart appears to act as a ceiling above the price. By the time the company was delisted in December 2015, the share price had fallen 83 percent below its issue price two years earlier.

As often happens with falling share prices, this price chart provided ample opportunity for investors to see the writing on the wall, and to reduce or close a position and protect their investment capital from further downside.




DSH - The first 2 months
(daily candle chart)

NOTES:

The Dick Smith (DSH) share price moved either side of it's issue price in the first few weeks.

Daily volume rather high on the first day (normal for a float), but subsequently fell away.


DSH - The first 8 months
(daily candles)

NOTES:

This daily candle chart shows a confirmed down trend "channel" from the highs of January 2014. (The two channel lines are not parallel so perhaps this should really be called a falling flag pattern).

A Big Black candle on 19 February with much higher volume indicates an abundance of sellers wanting to exit their positions. In the following weeks the price rallied because enough buyers thought the price was a good value proposition (later proved to be wrong).



Chart DSH#3
DSH - The first 19 months

(weekly candles)

NOTES:

Basically, the share price in this period (December 2013 to July 2015) moved within a range above about $1.92. The highs of the highest candles were successively lower, suggesting that investors were not convinced the shares were worth any more than the issue price of $2.20.



Chart DSH#4
DSH - The entire 2 years

(weekly candles)
 

Twitter (TWTR)

https://about.twitter.com/investor

8 November 2013

Offer price: US$26

The two charts at right look a little odd, with all the price action at the top of the chart. This is because the stock was offered at US$26, but then traded well above this price from day one. This means that those who bought into the IPO were significantly in the money (in the first few weeks.

See latest price chart at Yahoo.





Updated: 31 July 2014

TWTR - The first 3 months
(daily line chart)

Twitter opened above the issue price and traded strongly higher for a few weeks, then moved sideways until early February.

TWTR - The first 3 months
(daily candles)

See the updated chart and analysis at right before you draw a conclusion about the value of investing in IPOs.

TWTR - The first 9 months
(daily line)
Twitter rallied strongly in the first weeks, then fell 58 percent almost back down to the issue price. It has rallied again since early June. Even though investors are now in profit, this is a good example of being prepared to protect profits by selling once a downtrend has started.

Also see the latest 3 month chart
at www.bigcharts.com:

click for a larger version
in a new window

Freelancer Limited (FLN)

www.freelancer.com
15 November 2013
Offer price: 50c, with first days trading well above.
First day:
  • Open $2.50
  • Low: $1.42
  • High: $2.60
  • Close: $1.60
Note: A daily candlestick chart shows the range in price during each day.

See latest price chart at ASX.com.au.




Updated: 31 July 2014










FLN - The first few weeks
(daily line chart)

Trading above the issue price,
then mostly sideways for
the first few weeks.

FLN - The first few weeks
(daily candles)

This candlestick chart clearly shows the range in price, with a very tall candle (large range) on day one.

FLN - The first 8 months
(daily line chart)
This chart shows the sharp rally on day one, followed by a fall in the following days, then a tend higher to almost the November highs followed by a consistent downtrend from March 2014.
 
Recent chart with analysis and
comments coming soon.
In the meantime, see the
latest 3 month chart
at www.bigcharts.com:

click for a larger version
in a new window

Sealink Travel Group (SLK)

www.sealink.com.au
16 October 2013
Offer price: $1.10

See latest price chart at ASX.com.au.

See the charts at right for details (Toolbox Members click on the chart for a larger version).

NOTE: A note about liquidity (noting the number of trades each day/week in the charts at right):
If an investor/trader is keen to "protect capital", and intends to sell a stock once price weakness is confirmed, then it it important to have some buyers in the market who are ready to buy the stock. If a stock trades less than 50 times per day (for example), this equates to an average of one trade about every 7 minutes. When price wekaness becomes obvious to everyone, the chances of having a buyer in the market are greatly reduced. So, rather than liquidating your stock with minimal loss, you mightbe stuck with a stock with a rapidly declining share price.


Updated: 31 July 2014

SLK - The first few weeks
(daily line chart)

SLK - The first five months
(daily candles + volume + trades)

This candlestick chartis over a 5 month period, and some candles are simple doji candles suggesting that trading is light on some days (ie. an illiquid stock). The bottom window pane in the price chart is the number of trades each day.

SLK - The first nine months
(weekly candles + volume + trades)


The share price has been sitting above a support level for weeks (at least from February to July 2014).
The weekly trades chart above continues to show this stock is not liquid enough for many investors/traders.

Also see the latest 3 month chart
at www.bigcharts.com:

click for a larger version
in a new window

OzForex (OFX)

2017 - The company re-branded from OzForex to OFX Group Limited https://www.ofx.com/en-au/

11 October 2013
Offer price: $2

See latest price chart at ASX.com.au.

Consistently trading well above the offer price, in a nicely rising up trend, at least for the first five months until March 2014.
 
Updated: 31 July 2014











OFX - The first five months
(daily line chart)

This daily line chart for the first 5 months clearly shows the uptrend under way, taking the share price even higher than the early trading prices (and above the issue price).

OFX - The first five months
(daily candles)

OFX - The first ten months
(weekly candles)

Since the highs of March 2014, the stock has traded lower in a consistent downtrend, except for the 2-week retracement in May 2014, followed by a Big Black candle on heavy volume.

Also see the latest 3 month chart
at www.bigcharts.com:

click for a larger version
in a new window

iSelect (ISU)

www.iselect.com.au

24 June 2013
Offer price: $1.85

First day - down 15.7 percent.
First two months - trending higher from day one but still underwater.
After 5 months - strong down trend - loser.

ISU - The first two months
(daily line chart)

ISU - The first two months
(daily candles)

ISU - First 5 months
(weekly chart)

Xero Limited (XRO)

www.xero.com/au/

Commenced trading on ASX:
8 November 2012
First day's close: $4.48

Has been listed on the NZX since June 2007.


XRO - The first two months
(daily line chart)

XRO - The first two months
(daily candles)

XRO - First 12 months
(weekly chart)
Virtus Health (VRT)
June 2013
     
360 Cap ind fund (TIX)
December 2012
     

QR National (QRN)

December 2012 rebranded to: Aurizon (AZJ)
www.aurizon.com.au

22 November 2010
Offer price: $2.55

Touted at the time as Australia's biggest float in more than a decade (BusinessDay).
More detail: Wikipedia.

AZJ (QRN) - The first three months
(daily line chart)

AZJ (QRN) - The first three months
(daily candles)

AZJ - First 3 years
(weekly chart)

Facebook (FB)

18 May 2012
www.facebook.com

Offer price: US$38

This float was highly anticipated, and many people felt like they needed to participate. This stock was under water for 14 months. Capital invested elsewhere could have made some good returns.

Facebook - The first five weeks
(daily line chart)

Facebook - The first four months
(daily candles)

Facebook - 19 months
(daily chart)

NextDC (NXT)

13 Dec 2010
www.nextdc.com

Offer price: $1.00






NextDC - The first 3 months
(daily line chart)
Traded consistently above the offer price.

NextDC - The first 3 months
(daily candles)

NextDC - 3 years
(weekly chart)
Traded consistently above the offer price.

Myer (MYR)

www.myer.com.au

2 November 2009
Offer price: $4.10
First day: Open: $3.88, Close: $3.75




MYR - The first three months
(daily line chart)

MYR - The first three months
(daily candles)

MYR - First 4 years
(weekly chart)

BrisConnections (BCS)

www.brisconnections.com.au

July 2008 - For listing details, see the notes under each chart at right.

Notes for the charts:
(a) Logarithmic price scale makes it
easier to see the price action details
at lower prices.
(b) Volume is low (or zero) on many days.
(c) Number of trades per day is very low
(or zero) on many days.

Items (b) and (c) indicate low liquidity,
and difficult to exit if desired.

Also see opinion comment, and  more information at Wikipedia.org.

BCSCA - August 2008 - May 2009
(daily line chart)

Listed:- 31 July 2008 (code:BCSCA)
Initial instalment: $1
with two further $1 instalments owing.
First day - fell 60 percent.
November 2008 - shares had fallen
to 0.1cents. Trading continued
occasionally at very low volumes.


BCSCB - May 2009 - January 2010
(daily line chart)

May 2009 (code:BCSCB)
Second instalment paid ($1),
taking the paid-up cost to $2 per share,
with trading on 7 May 2009 to a
daily low of 51cents and closing at $1.

13 Jan 2010 - Trading suspended pending
payment of the third and final $1
instalment, taking the fully paid-up
cost to $3.

BCS - January 2010 - November 2012
(daily line chart)

Friday 15 January 2010 (code:BCS)
Trading in fully paid securities started,
with one trade for the day at $1.30.

13 Nov 2012 - Shares suspended
from trading.

Asciano (AIO)

www.asciano.com.au

6 June 2007 - Demerged from Toll Holdings.
Stock debut: $10.35

Note: Subsequent share issues, raising, dilutions, etc., result in the historic share price being corrected, to show historic prices that don't appear to relate to the original raisings.






AIO - The first five weeks
(daily candle chart)
Note: Nice 10 percent increase in the
first two weeks to an all-time high,
and then just down from there.

AIO - The first 20 months
(weekly line chart)

Note: From the all-time high just after
listing, it was all down hill for 20 months
to an all-time low. A fall of 96 percent.

AIO - The first 6 years
(weekly line chart)

Note: Since the all-time low in February-
March 2009, the share price first
rose for a while, and then has traded
mostly sideways ever since.

Boart Longyear (BLY)

www.boartlongyear.com

5 April 2007
Offer price: $1.85

(Said to be the second largest IPO in the history of the ASX - Source: Wikipedia).

May 2010 - Share consolidation (one for 10), increased the nominal share price, and back-adjusted the IPO price up to $15.

BLY - The first three months
(daily line chart)

BLY - The first three months
(daily candles)

BLY - The first 6 years
(weekly chart)
Note: This chart  should be drawn with
a logarithmic price scale for a
better depiction of price action.
WDS Limited (WDS)
2006
     

AMP Limited (AMP)

www.amp.com.au (About AMP)

15 June 1998 - demutualised.

12 December 2003 - demerged.



















AMP - The first 2 months
(daily line chart)

Note: Share prices have been
back-corrected due to the
2003 demerger (and possibly other
capital reconstructions).

AMP - The first 2 months
(daily line chart)

Note: Share prices have been
back-corrected due to the
2003 demerger (and possibly other
capital reconstructions).

AMP - The first 5 years
(weekly line chart)


AMP - From demutualisation
to November 2013
About 15 years
(weekly line chart)

Telstra Corporation (TLS)

www.telstra.com.au

T1 - 1997 (the offer document)
Offer price $3.30 (max price in two instalments)

T2 - 1999 (the offer document)
Offer price $7.40

T3 - 2006 (the offer document)
Offer price $3.60

More details about the prospectus offer documents at www.telstra.com.au

Highlights:
  • Float 1998
  • Rising share price initially, then a long term downtrend.
  • Downtrend until November 2010 with two more public offerings along the way.

TLS - The first 3 months
(daily line chart)

TLS - The first 3 months
(daily line chart)

TLS - From it's peak in 1999
to it's lowest close in 2010
(weekly line chart)


TLS - From it's peak in 1999
to November 2013 showing
a rising price since Nov 2010

(weekly line chart)


This is one of the many tools in Brainy's Share Market Toolbox.

The information presented herein represents the opinions of the web page content owner, and
are not recommendations or endorsements of any product, method, strategy, etc.
For financial advice, a professional and licensed financial advisor should be engaged.


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