Dependant on the company an IPO can be a huge event, the kind of thing that gets savvy investors frothing at the mouth (and wallet) in the hope of getting part of the freshly baked pie. However, as is the fickleness of the markets, not all of these launches go off exactly to plan, leading to the dreaded label of IPO ‘flop’.
Of course ‘flop’ is a relative term, and includes anything from a stumble out of the starting blocks to the kind of decline that renders a company effectively worthless. With that in mind below are 5 of the most note-worthy ‘flops’ of the last few years!
5. Facebook Inc
It might come as a surprise that a company like Facebook is on a list of IPO flops. However, back in May 2012 its current darling-status was far from guaranteed.
Priced at $38, making it at the time the most valuable US company on the market, Facebook only managed a 23 cent increase by the end of the its first day of trading – not exactly the blockbuster opening everyone was expecting. Things only got worse after that point, with Facebook falling for 9 of the next 13 trading sessions. That wasn’t to be the end of the company’s misery; cut to the end of July 2012 and Facebook suffered a 12% plunge in a single session as it reported a second quarter loss of $157 million, something that eventually led to the social media giant’s all-time low of $17.56.
Of course it all turned out OK in the end, with Facebook now worth just over of $115 per share, a value that is nearly 3 and a half times higher than its market debut.
4. Twitter Inc
In terms of long-term flops it’s hard to find a more high profile example than Twitter. Initially the IPO seemed like a runaway success – an offering price of $26 had increased to $44.90 by the end of its first day of trading, and despite a rocky few sessions in the weeks following the stock had surged all the way to $74.71.
Yet that peak was to be Twitter’s last taste of unmitigated market love. For since then years’ worth of disappointing earnings report, normally showing some kind of user slowdown, and a revolving door of CEOs, has eroded the company’s price, culminating in lows of just $14 in the first half of 2016.
In a way Twitter is the mirror image of Facebook. While one has struggled the other has soared, highlighting just how much can change in the months and years that follow even the most successful IPO.
3. GoPro Inc
Like Twitter, GoPro’s short term post-IPO performance was a sight to behold. After an offering of $24 per share the stock had increased to $31.34 by the end of day one; 4 months later and GoPro’s rise had shown no signs of abating, the camera company briefly grazing $98.40.
However, this early peak was soon to become a distant memory for GoPro. It may have taken 12 months, but by October 2015 the company was trading lower than its initial offering price thanks to a slowdown in sales of its titular action camera and the rocky launch of its GoPro Hero4 Session device.
Flash forward another year and things have gone from bad to worse for GoPro. Hitting an all-time low of $8.60 in May, less than a tenth of the price it hit in the months following its IPO, GoPro now lurks just under the $10 mark.
2. Zynga Inc
You might not know what Zynga is; you probably, however, recognise the likes of Farmville and Words With Friends, or one of the company’s many other Facebook and mobile phone time-wasters. Back in 2011 the decision to take the firm, which utilises the ‘freemium’ model in most of its games, likely seemed like a good idea. After all, who wasn’t whiling away the work day on one of their addictive offerings?
Opening on December 16th at $10 the stock’s opening day was a disaster, Zynga closing 5% lower – just over 3 weeks later and the company had briefly dipped under $8. Yet the company was soon rescued by Facebook’s own IPO, climbing to an all-time peak of $15.89 by the start of March 2012.
That was, however, to be the last time Zynga scaled such heady heights. A series of missteps since then has left the stock trading below $3, less than a third of its IPO and nearly a fifth of that Facebook-inspired peak. In fact in February 2016 Zynga fell even further, plunging below the $2 mark thanks to the consistent decline in its daily active users.
1. lastminute.com PLC
Of course it is only fair that the top spot be taken by a company that is no longer listed on any stock exchange. Part of the dot com bubble, holiday-helper lastminute.com was floated back in 2000 at £3.80, surging 28% on its first day of trading to cross the £5 mark. Within 18 months, however, widening losses and the tragic attacks on 9/11 left the stock trading at a mere 17p, a truly staggering decline.
While lastminute.com didn’t remain at that low, by 2005 it was still only worth around £1.65 per share. In that year the website disappeared from the London Stock Exchange, bought for £577 million by US firm Sabre, ending a rather meagre 5 year existence as a listed company.
The ignominy the online retailer has suffered since its debut reached a nadir at the end of 2014, when Sabre then sold lastminute.com to Bravofly Rumbo for a mere £76 million. The silver lining? Bravofly Rumbo deemed the brand significant enough to rename the entire company Lastminute.com Group in 2015, meaning there is still a very slim chance that one day it could make its market comeback.
