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| Metric | Value |
| Number of companies that went public | Approximately 105 |
| Notable companies that went public | Twilio, Line Corporation, Acacia Communications, Nutanix, ZTO Express, US Foods Holding Corp., BlackLine, Trivago |
| Largest company that went public | Line Corporation ($7.3 billion valuation) |
In 2016, the IPO scene was active, with a total of 105 IPOs. These companies raised about $18.8 billion. A mix of technology, healthcare, and service companies made their debut on the public market. If you’re curious about which companies had their IPO and how they performed, keep reading to learn about these companies that had their IPO in 2016.
Major Events Affecting Stock Markets in 2016
China’s January Stock Slump
Source: DeMARK Analytics
In early 2022, shares on the Chinese market took a big tumble. On January 4th, stocks sank about 7% in one day. This steep drop got folks worried worldwide. Investors began to fret over China’s economy slowing down and the value of its money, the yuan.
Things got worse in mid-January too. By then, the market had fallen nearly 18% from where it was. This had investors feeling uneasy and it rippled out to impact stock exchanges globally. A few things were concerning financial traders:
- China’s economy was growing at a slower pace than before.
- The yuan was worth less compared to other currencies.
- Global markets were feeling nervous about how stable China’s financial situation was.
With so much uncertainty, many watched to see if the market would bounce back up again. It was a tense time as events continued unfolding.
The Brexit Vote’s Market Impact
On June 23rd, the UK made the surprise choice to exit the European Union. This “Brexit” referendum sent stock exchanges into turmoil straight away. In the very next day’s trading on June 24th, financial markets saw their largest ever single-day losses, with over $2 trillion wiped off share prices (1).
By June 27th, total value dropped had reached around $3 trillion lost. Many traders were caught off guard by the uncertainty of how Brexit might change things.
However, recovery signals soon emerged. As investors adjusted to the new situation, markets started stabilizing once more. While the initial Brexit vote delivered a shock, exchanges were able to regain footing as folks gained a better sense of what the future with the UK outside the EU might hold. It showed how financial systems can adapt even to unexpected political outcomes.
The 2016 US Election and the Markets
In November, Donald Trump was elected President. Right after, the stock market saw a dip of around 5% as investors adjusted to the uncertainty (2).
- A Bump, Then a Boost:
- At first there was worry over what policies might come.
- But soon traders started feeling better about Trump’s ideas to help businesses.
- By December, the major stock indexes set new all-time highs.
This up-and-down shows how the market reacts to big political moments. Feelings can shift quickly from concern to optimism as more information becomes known. The election is a reminder that unexpected world events can cause short-term volatility, but over the long-run the economy and companies usually keep performing.
OPEC Agrees to Produce Less Oil
In late November, OPEC (Organization of the Petroleum Exporting Countries) decided to reduce how much oil its members take out of the ground each day. This helped bring more balance between supply and demand in the oil market.
The price for a barrel of crude oil jumped above $50 as a result. Many companies that produce or supply energy saw an improvement in their share prices too. Investors felt reassured about investing in energy stocks again (3).
This showed how actions by large oil producers halfway around the world can still affect prices here at home. After months of low prices, many investors were glad to see more stability in the oil industry. With cooperation between countries, supply and demand in oil markets has a better chance of staying in line.
Global Growth Worries Weighed on Markets
In early 2016, concerns about the pace of economic expansion around the world contributed to fluctuations in the stock market. Swings in commodity prices like oil added to the uncertainty.
Some key issues fueling investor unease included:
- Slowing growth in large economies like China (4)
- Unpredictability in international trade agreements
- Mixed signals from economic reports
With questions around how strong global demand would be, market participants paid close attention to new data for clues of recovery. The interplay of these worldwide factors led to notable ups and downs in share prices throughout the year. A more stable economic outlook worldwide could help smooth market movements going forward.
Key Insights of IPOs in 2016
Overview of IPO Activity
In 2016, the IPO market showed interesting trends. There were 105 IPOs in the U.S., raising about $18.8 billion. This number was lower than in previous years. For example, in 2014, there were 275 IPOs, and in 2015, there were 170.
- Market Conditions:
- The market faced volatility due to global concerns.
- This created a cautious atmosphere for companies looking to go public.
Investors were more careful, which affected the number of IPOs. Companies had to think hard about timing and pricing.
Performance Insights
The performance of IPOs in 2016 revealed some key points. The average return for IPOs was only about 0.6% by the end of the year. This was not great compared to the S&P 500, which performed better.
- Sector Performance:
- Technology companies generally did better.
- Many tech IPOs saw significant gains after their offerings.
This showed that while the overall market was tough, certain sectors could still shine.
- Investor Sentiment:
- Some companies had successful debuts despite the challenges.
- Attractive pricing played a big role in their success.
These insights highlight the mixed feelings in the IPO market during 2016. While some companies thrived, others struggled to gain traction.
Notable IPOs of 2016
Credits: pexels.com (Photo by: RDNE Stock Project)
1. Twilio Inc. (TWLO)
- IPO Price: $15
- IPO Date: June 23, 2016
- Country: United States
- Stock Exchange: New York Stock Exchange
- Industry: Cloud Communications
- Valuation: $1.1 billion
Twilio had a successful IPO, raising around $150 million. On its first day, the stock price jumped significantly. Investors were excited about Twilio’s potential in the cloud communications space. The strong demand showed that many believed in the company’s future.
2. Line Corporation (LN)
- IPO Price: $11.50
- IPO Date: July 14, 2016
- Country: Japan
- Stock Exchange: New York Stock Exchange
- Industry: Messaging and Social Media
- Valuation: $7.3 billion
Line Corporation raised over $1.1 billion, making it the largest tech IPO of the year. The company is known for its popular messaging app. Investors were eager to be part of this successful tech story. The strong interest highlighted the growing demand for messaging services.
3. Acacia Communications, Inc. (ACIA)
- IPO Price: $15
- IPO Date: May 28, 2016
- Country: United States
- Stock Exchange: NASDAQ
- Industry: Telecommunications
- Valuation: $1.2 billion
Acacia raised about $103 million during its IPO. On the first day, its stock nearly doubled in value. This strong performance showed that investors were confident in Acacia’s technology. The company focuses on optical networking solutions, which are important for internet infrastructure.
4. Nutanix (NTNX)
- IPO Price: $16
- IPO Date: September 30, 2016
- Country: United States
- Stock Exchange: NASDAQ
- Industry: Cloud Computing
- Valuation: Approximately $1 billion
Nutanix raised about $238 million during its IPO. The strong market demand reflected investors’ interest in cloud computing. Nutanix provides solutions that help businesses manage their data more efficiently. This focus on innovation attracted many investors.
5. ZTO Express (ZTO)
- IPO Price: $19.50
- IPO Date: October 27, 2016
- Country: China
- Stock Exchange: New York Stock Exchange
- Industry: Logistics and Delivery
- Valuation: $1.4 billion
ZTO faced challenges after its IPO. Its shares opened below the offering price. Despite this, ZTO is a major player in the logistics industry in China. The company provides delivery services, which are in high demand as online shopping grows.
6. US Foods Holding Corp. (USFD)
- IPO Price: Not specified
- IPO Date: May 25, 2016
- Country: United States
- Stock Exchange: New York Stock Exchange
- Industry: Food Distribution
- Valuation: Raised $1 billion
US Foods is a leading food distributor. The company’s IPO was well-received, raising a significant amount of money. Investors saw potential in the food service industry, especially as demand for food distribution continues to rise.
7. BlackLine, Inc. (BL)
- IPO Price: Not specified
- IPO Date: April 7, 2016
- Country: United States
- Stock Exchange: NASDAQ
- Industry: Cloud Accounting
- Valuation: Not specified
BlackLine provides cloud-based accounting software. The company’s IPO attracted interest from investors looking for tech opportunities. Its focus on automating financial processes made it appealing in a growing market.
8. Trivago N.V. (TRVG)
- IPO Price: Not specified
- IPO Date: December 1, 2016
- Country: Germany
- Stock Exchange: NASDAQ
- Industry: Travel and Hospitality
- Valuation: Raised about $280 million
Trivago is a hotel search platform that helps travelers find the best deals. The company’s IPO was successful, raising a good amount of money. Investors were excited about the travel industry, especially with the rise of online booking.
IPO Performance Faced Market Headwinds
2016 presented challenges for companies entering the public markets. Many stocks struggled to maintain their IPO prices. With investors feeling cautious due to economic factors, it was difficult for these firms to gain traction.
By year’s end, the average return for newly-public companies was a modest 0.6% – lagging broader indexes. However, not all IPOs stumbled:
- Twilio stood out with strong growth after its offering. Investors responded well to its potential in cloud-based communications.
- Acacia Communications also saw solid stock gains. The market recognized value in its optical networking technologies.
While market conditions made it tough for most, these success stories showed that innovation and business fundamentals could still win over shareholders. For companies addressing real needs with compelling solutions, an IPO offered a path to capitalize on opportunities for growth, even in a period of uncertainty. Their achievements provided hope that future offerings may also find supportive investors.
Conclusion
In conclusion, the IPOs of 2016 showcased a diverse range of companies with varying success levels. While some thrived, others faced significant challenges in the public markets. The year serves as a reminder of how market conditions and investor sentiment play crucial roles in determining IPO outcomes.
FAQ
What were some of the biggest tech IPOs in 2016?
Some of the biggest tech IPOs in 2016 included The Trade Desk, a digital advertising platform, ZTO Express, a Chinese delivery company, and Blackline Systems, a cloud-based accounting software provider. These tech IPOs saw strong investor interest and saw their stock prices jump on their first day of trading, reflecting the growth potential of the tech industry.
How did the 2016 IPO market perform compared to previous years?
The 2016 IPO market saw a rebound from the financial crisis, with more companies going public and higher amounts raised compared to the previous few years. However, the IPO market was still relatively muted compared to the tech boom years, as concerns over cyber threats and global economic uncertainty made some companies and investors cautious about going public.
What were some of the largest IPOs in sectors outside of tech in 2016?
While tech IPOs dominated the headlines, 2016 also saw significant IPOs in other sectors like real estate, with the largest being the IPO of casino operator Red Rock Resorts, and the consumer goods sector, with the IPO of snack company Hostess Brands. These non-tech IPOs showed the broad appeal of the public markets for companies looking to raise capital and go public.
How did the 2016 IPO class perform in the aftermarket?
The 2016 IPO class saw a mix of post-IPO stock performance, with some high-profile tech IPOs like The Trade Desk and Blackline Systems seeing their stocks soar, while others like the delivery company ZTO Express saw more muted returns. Overall, the 2016 IPO class demonstrated the continued investor appetite for well-performing tech stocks, as well as the more selective nature of the public markets.
What were some of the notable international IPOs that happened in 2016?
2016 saw a number of notable international IPOs, including the high-profile IPO of the Hong Kong-based delivery company ZTO Express, as well as the IPO of the UK-based financial services firm CMC Markets. These international IPOs highlighted the global nature of the public markets and the growing investor interest in companies from outside the United States.
What were some of the largest IPO offer prices and market caps in 2016?
The 2016 IPO market saw a range of offer prices and market caps, with some of the largest including the $1.4 billion IPO of Getty Images, the $1.2 billion IPO of Crispr Therapeutics, and the $552 million IPO of security firm Blackline Systems. These sizable IPOs demonstrated the continued appetite for high-growth companies tapping into the public markets.
What role did venture capital and private equity play in the 2016 IPO market?
Venture capital and private equity firms continued to play a key role in the 2016 IPO market, with many companies going public after receiving significant private investment. This allowed companies to grow and scale before tapping into the public markets, though it also raised questions around corporate governance and the power of private capital.
How did the performance of 2016 IPOs compare to the broader stock market?
While the 2016 IPO class saw a mix of post-IPO stock performance, with some high-flyers and some more muted returns, the overall performance was generally positive. Many 2016 IPOs outperformed the broader stock market, reflecting the continued investor appetite for growth-oriented companies, especially in the tech sector.
References
- https://cepr.org/voxeu/columns/economic-effects-brexit-evidence-stock-market
- https://www.nytimes.com/2024/11/05/business/stock-market-election-trump-harris.html
- https://www.imf.org/en/Blogs/Articles/2017/03/15/opecs-rebalancing-act
- https://www.weforum.org/stories/2016/01/what-does-2016-hold-for-the-global-economy/
