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2012: For IPOs, Its the Year of the Blooper

Still, string of botched offerings won't hinder deal demand


As a long-time follower of the IPO market, I’ve seen a number of terrible deals. It’s just the nature of the business: For every breakout company, there are several duds.

But up until this year, we didn’t really have to worry about problems with the stock exchanges themselves, whose core systems have always been rock-solid.

Our most recent mess-up: The initial public offering for WhiteHorse Finance (NASDAQ:WHF).

On WhiteHorse’s debut Wednesday, the Nasdaq OMX Group (NASDAQ:NDAQ) attempted to temporarily halt trading — a common practice — but someone accidentally pressed a button that canceled the offering! WHF shares did not resume trading until late in the afternoon, and the stock price ended the day off by nearly 7%.

This follows in the footsteps of the Facebook (NASDAQ:FB) IPO, when Nasdaq computers failed to process the influx of orders and, as a result, many customers did not receive confirmations until hours after the trades. Investors lost millions.

Then there was the BATS Global Markets offering. The company attempted to pull off the IPO on its own trading platform, but the computers went haywire and the stock price rapidly plunged to near $0. BATS had no choice but the cancel the deal.

Still, even in light of a poor year for IPO execution, I don’t think we’ll see too much of an adverse affect on investor confidence in future deals.

The fact remains that what happened with Facebook and WhiteHorse is extraordinarily rare — the Nasdaq and NYSE Euronext (NYSE:NYX) have a strong record of pulling off initial public offerings. (Though Nasdaq OMX might want to review its procedures.)

Besides, IPOs still are mainly a game for institutions, which tend to dominate trading in the first days of trading. And especially when it comes to hot companies, you won’t see them shying away for fear of a glitch.

Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders.”  Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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