Last week’s botched IPO of the BATS Global Markets will rank as one of the worst deals in history. But there was at least one saving grace: Investors didn’t lose any money.
Here’s a look at some of the goriest IPOs ever:
Pets.com — a top seller of pet food and supplies via the Internet — was founded in August 1998 and came public in February 2000, issuing 7.5 million shares at $11 each.
Pets.com spent heavy amounts on advertising, such as with a commercial for the 2000 Super Bowl. And its mascot — a sock puppet of a dog holding a microphone — was a big hit. The company also provided its customers with free shipping, which was a nice deal. After all, it’s not cheap to send out those hulking bags of dog food.
The company had plenty of believers. In fact, even Internet retail maven Amazon.com (NASDAQ:AMZN) was an early investor.
But hope isn’t results, and Pets.com’s business strategy was a miserable failure. By November 2000 — less than a year after the IPO — Pets.com ran out of money.
VeraSun, a top producer of ethanol, launched its IPO in June 2006 by raising $420 million.
VeraSun relied heavily on federal subsidies. But the real problem was the surge in corn prices, which resulted in huge losses. And here was a glut of ethanol in the market, with energy demand dropping amid the recession.
The global credit crunch didn’t help matters, either.
With little capital available, VeraSun had no choice but to go bust on Oct. 31, 2008. And it wasn’t alone — a handful of other ethanol operators would do the same, including Beatrice Biodeisel, Bioenergy of America, Ethanex Energy, Gateway Ethanol and Greater Ohio Ethanol.
While Pets.com and VeraSun eventually hit empty, broker Refco did it lickety split.
Refco was a large broker of commodities and futures contracts. But its CEO, Phillip R. Bennett, was playing fast and loose with the books. For at least a decade, he hid as much as $430 million in debt. The company went public on Aug. 11, 2005, then filed for Chapter 11 bankruptcy two months later, on Oct. 17.
A couple years later, Bennett pleaded guilty to 20 charges of fraud and was sentenced to 16 years in a federal prison.
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “The Complete M&A Handbook,” “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.