Category | Details |
Number of companies that went public | Approximately 285 |
Notable companies that went public | Conrail, Charles Schwab, Carnival Cruise Lines, Fastenal, Agouron Pharmaceuticals, Conmed |
In 1987, the stock market buzzed with anticipation as companies eagerly offered shares to the public. However, the year took a drastic turn with the crash on Black Monday, October 19, reshaping the market landscape. Companies that had their IPO in 1987 faced unexpected challenges as the market shifted. To learn more about these companies and how they navigated the aftermath, keep reading for a deeper look into the impact of that pivotal year.
Key Events Affecting Stock Markets in 1987
1987 was a wild year for the stock market. At first, everything seemed great. But then came Black Monday, and things changed fast! Here’s a closer look at what happened.
Black Monday (October 19, 1987)

Source: PIX11 News
On October 19, 1987, the stock market faced a huge shock. The Dow Jones Industrial Average (DJIA) dropped by 508.32 points. This was a massive fall of 22.61%. It was the biggest single-day drop ever recorded (1).
- The crash didn’t just hit the U.S. It spread around the world.
- In London, the Financial Times 100 Index fell by 25% in just a few days.
Many people were scared. They worried about losing their money. Investors everywhere were in a panic. Stocks were being sold left and right. It felt like a bad dream.
Economic Factors Leading to the Crash
Before Black Monday, there were some economic worries. People were concerned about rising inflation and higher interest rates (2).
- Inflation means prices go up. When prices rise, money doesn’t stretch as far.
- Higher interest rates make it more expensive to borrow money. This can slow down spending and investment.
Many experts believe that program trading made things worse. Program trading uses computers to buy and sell stocks quickly. When prices started to fall, these computers sold stocks in a hurry. This caused even more panic.
Investors felt uneasy. They didn’t know what would happen next.
Geopolitical Tensions
During 1987, there were also conflicts in the Middle East. These tensions made investors even more nervous.
- People feared that wars could hurt the economy.
- They worried that oil prices might rise, making everything more expensive.
When investors feel uncertain, they often pull back. They may stop buying stocks and start selling. This can lead to a market drop.
Regulatory Changes Post-Crash
After Black Monday, the Federal Reserve stepped in. They wanted to help stabilize the financial system.
- They provided liquidity. This meant they made sure there was enough money flowing in the markets.
- They also introduced circuit breakers. These are rules that stop trading during big market drops.
These changes were important. They aimed to prevent another crash like Black Monday from happening again.
Recovery and Lessons Learned
Surprisingly, the stock market started to bounce back quickly after the crash. By mid-1988, many stock prices were back to where they were before Black Monday.
- This quick recovery shocked many people.
- Investors learned that the market could come back after a big drop.
The crash taught everyone valuable lessons. It showed the need for better risk management. Companies and investors realized they needed to be more careful with their money.
In the end, 1987 was a year of big lessons for the stock market.
Key Insights of IPOs in 1987
Credits: pixabay.com (Photo by: Tung Lam)
The IPO landscape in 1987 faced ups and downs. The year started strong but took a big hit from Black Monday. Here’s a deeper look at the key insights.
1. Initial Market Conditions
The year 1987 kicked off with a lot of excitement in the stock market. Investors were feeling hopeful (3).
- Unemployment rates were low, which made people feel secure about their jobs.
- Many believed it was a great time for companies to go public.
With a healthy economy, companies felt encouraged to sell their shares to the public. Investors were eager to buy into new businesses. This positive atmosphere created a buzz around IPOs.
2. IPO Activity
In 1986, a total of 393 companies went public with IPOs. This was a sign of a thriving market. But in 1987, that number dropped to 285.
- The crash of Black Monday had a big impact on this decline.
- Many companies that planned to go public decided to hold back.
The sudden drop in the market made it hard for companies to price their shares. They were worried that the public would not buy their stocks. This hesitation led to fewer IPOs.
3. Impact of Black Monday
Black Monday changed everything for the IPO market. It created a wave of uncertainty.
- Companies faced many challenges in pricing their shares correctly.
- Many businesses decided to cancel their IPO plans altogether.
Estimates suggest that around 200 companies put their plans on hold after the crash. This was a significant number, showing how much fear affected the market. The excitement from earlier in the year quickly faded.
4. Shift in Investor Sentiment
After Black Monday, investors became much more cautious. They were worried about the future.
- Fear spread throughout the market, making many hesitant to invest.
- Companies noticed this change and didn’t want to risk going public during such a shaky time.
This shift in sentiment meant that businesses were less likely to take the leap into the public market. Investors wanted to see stability before they committed their money.
5. Long-Term Effects on IPO Market
As time went on, the market started to show signs of recovery. However, investors remained hesitant.
- Even with some improvement, the number of new IPOs in 1988 stayed low.
- Many companies were still cautious about going public.
The lingering effects of Black Monday made everyone think twice. The excitement that had filled the beginning of 1987 was replaced by a more careful approach.
6. Economic Context
At the start of 1987, optimism filled the air. Many IPOs were happening, and investors were eager.
- Companies were ready to take advantage of the good conditions.
- But after Black Monday, that optimism turned into doubt.
The shift in the market created a tough environment for IPOs. Companies had to rethink their strategies. The excitement of the beginning of the year was lost, replaced by uncertainty and caution.
Notable Companies That Had Their IPO in 1987
Credits: pexels.com (Photo by: Danik Prihodko)
Some companies that went public in 1987 are still well-known today. Here are a few:
1. Conrail
- IPO Date: 1987
- Country: United States
- Industry: Transportation
Conrail, or Consolidated Rail Corporation, made a big splash with its IPO in 1987. This company focused on rail transport, moving goods across the country. Before Conrail, many railroads struggled. They needed help to stay competitive. Conrail changed that. It helped improve rail services.
Then, CSX and Norfolk Southern decided to buy Conrail. This takeover changed how transportation worked in the U.S. Railroads became more competitive and efficient. The merger allowed for better service, lower prices, and more choices for customers. Today, Conrail is part of a larger network of rail services.
Conrail’s beginnings in 1987 paved the way for modern rail transport. It showed how important railroads are for moving goods. This company helped shape the future of transportation in America. Even today, railroads play a vital role in how things travel across the country.
2. Charles Schwab
- IPO Date: 1987
- Country: United States
- Industry: Financial Services
Charles Schwab & Co. is known for helping people invest their money. In 1987, the company went public after buying back shares from Bank of America. This move allowed Schwab to grow and reach more customers.
Before Schwab, investing was often expensive. Many people felt they couldn’t afford to invest. Charles Schwab changed that. The company offered low-cost trading and investment options. This made investing accessible for many more people. Today, Charles Schwab helps millions save and invest for their futures.
The IPO marked a turning point in how people approached investing. It encouraged more people to think about their financial futures. This change allowed many to start investing with confidence. Charles Schwab continues to be a major player in financial services, showing how important it is to make investing easy and affordable.
3. Carnival Cruise Lines
- IPO Date: 1987
- Country: United States
- Industry: Travel and Leisure
Carnival Cruise Lines made waves when it went public in 1987. The company quickly became one of the largest cruise operators in the world. With its fun ships and exciting destinations, Carnival attracted many travelers.
Going public helped them grow even faster. The IPO allowed Carnival to expand its fleet and offer more cruise options. Some of the benefits of their growth include:
- More ships for travelers to choose from
- Exciting new destinations
- Better onboard experiences
Today, Carnival offers a wide range of cruises, making vacations special for families and friends. The IPO was a crucial step for the company, allowing it to provide unforgettable experiences. Carnival’s focus on fun and adventure has kept it popular for many years.
4. Fastenal
- IPO Date: 1987
- Country: United States
- Industry: Wholesale Distribution
Fastenal went public in 1987, focusing on industrial supplies. This company sells products like fasteners, tools, and safety equipment. Fastenal quickly gained a strong position in the wholesale distribution market.
The company serves many businesses by providing the supplies they need. Some of the key products Fastenal offers include:
- Fasteners for construction
- Tools for manufacturing
- Safety equipment for workers
Fastenal’s growth shows how important it is to have the right supplies for industries. They focus on customer service and affordable pricing. This commitment has helped Fastenal thrive today. They continue to support businesses with quality products and services.
5. Agouron Pharmaceuticals
- IPO Date: 1987
- Country: United States
- Industry: Biopharmaceuticals
Agouron Pharmaceuticals made its mark with an IPO in 1987. This biopharmaceutical company focused on developing new medicines. Agouron worked hard to create treatments for diseases that affected many people.
Later, it was acquired by Warner Lambert, which then merged with Pfizer. This acquisition allowed Agouron’s innovations to reach even more patients. The IPO helped Agouron gain the resources needed to grow. Some of the important areas they focused on include:
- Developing antiviral medicines
- Finding treatments for cancer
- Creating new therapies for diseases
Agouron’s work in healthcare has made a difference for many. Their commitment to innovation continues to impact the industry today.
6. Conmed
- IPO Date: 1987
- Country: United States
- Industry: Medical Equipment
Conmed is a company that manufactures surgical equipment. It went public in 1987. The IPO highlighted the growing demand for medical tools. Conmed’s products help doctors perform surgeries safely and effectively.
Some of the key products they offer include:
- Surgical instruments
- Anesthesia equipment
- Products for minimally invasive procedures
The company’s IPO allowed it to invest in new technologies and expand its product line. Conmed continues to play a vital role in the healthcare industry. They provide essential tools for medical professionals, helping improve patient care. The company’s beginnings in 1987 show how important innovation is in the medical field.
Impact on Future IPOs
The crash had a big effect on the IPO market. After Black Monday, many companies thought twice about going public. Here are some key points:
- About 200 companies decided to wait and postponed their offerings.
- Only around 20 new IPOs actually happened after the crash.
This cautious approach changed how companies and investors looked at the market for many years.
In 1987, many companies were excited to go public. They dreamed of success and growth. But everything changed when the market crashed. The hope that filled the air turned into worry.
This year taught everyone important lessons. Companies learned to be careful with their plans. Investors became more cautious too. They started to think about risks differently.
Today, the effects of that year are still felt. Companies are still careful when they think about going public. They remember how quickly things can change in the market. The lessons from 1987 continue to shape decisions in the IPO world.
Conclusion
1987 was a pivotal year for IPOs, marked by initial excitement followed by uncertainty. Companies going public faced significant challenges, and the market crash altered investor perceptions of new offerings. Despite a recovery, a cautious sentiment lingered, influencing IPO strategies for years. This period serves as a reminder of how quickly the financial landscape can shift, reshaping investor confidence and future market trends in the process.
FAQ
What role did companies like Charles Schwab & Co. play in transforming the financial markets during the 1987 IPO wave?
Charles Schwab & Co., based in San Francisco, revolutionized how institutional investors and everyday Americans accessed the stock market. The company’s public offering coincided with a period when personal computers were starting to transform trading. This democratization of financial markets created astounding wealth creation opportunities for a wide range of investors.
How did tech stocks and biotechnology companies perform compared to blue chip stocks in the 1987 IPO market?
During this transformative year, many tech stocks and biotechnology companies went public alongside traditional blue-chip stocks like Bank of America. While best-performing stocks varied, analysts credit the period’s outperformance to the growing adoption of personal computers and emerging technologies.
What factors influenced share price and the 300-point intraday range during the volatile 1987 market?
The stock market experienced significant volatility, with a 300-point intraday range becoming common. Public stock offerings faced scrutiny from institutional investors, while factors like foreign companies entering the market and backdoor government bailout discussions affected trading patterns.
How did dividend stalwarts like Procter & Gamble compare to broadcasting companies in terms of annual dividend hikes?
Companies known for generous dividends, particularly Procter & Gamble, maintained their reputation through annual dividend hikes. Meanwhile, broadcasting companies that went public often focused more on annual revenue growth rate than dividend payments.
What distinguishes the largest company by market value versus the largest beverage company from that era?
When comparing the largest company by revenue to the largest beverage company of the 1987 IPO class, key differences emerged in their approach to wealth creation. Some focused on outsized wealth creation through share price appreciation, while others emphasized being a wealth creator through steady growth.
How has the attitude for investors changed since 1987, particularly regarding Australian Stocks and the 6.375 Global Government Plus Fund?
The investing landscape has evolved dramatically since 1987. Modern platforms like Amazon Web Services and cloud-based services have transformed how investors approach both domestic and international markets, including Australian Stocks and various fund options.
What impact did the biggest share sale of 1987 have on the List of companies from the United States of America?
The year’s biggest share sale influenced many subsequent public offerings and shaped Republic Services and other companies’ trajectories. Analysts’ favorite picks often focused on the 7 Best Small-Cap Stocks alongside established blue chip stocks.
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References
- https://www.goldmansachs.com/our-firm/history/moments/1987-black-monday
- https://www.investopedia.com/terms/s/stock-market-crash-1987.asp
- https://quartr.com/insights/company-research/companies-that-had-their-ipo-in-1987-from-optimism-to-black-monday