Stacey Vanek-Smith: Before the stock market went berserk the news was all about social media -- remember that? Groupon, Facebook, Twitter, and when they would make an initial public offering, or IPO, and start selling shares of stock. Investors were salivating. Oh, how times have changed.
Max Wolff joins me now. He's chief economist with Greencrest Capital and he's been tracking the IPO market. Good morning, Max.
Max Wolff: Good morning, thank you for having me.
vanek-Smith: This was supposed to be a big blockbuster summer for tech IPOs. There was LinkedIn, of course, we heard about possibilities of Groupon and Twitter and Facebook. Some were even saying that we were in a new tech bubble. What happened?
Wolff: So what happened is the not quite best and brightest of the breed, but the ones who got to the market first have gotten beat up with the general tumult in the market. So we do still see the excitement on the biggest and best for the social media breed, but they haven't made it to the market yet. And the market that they're looking toward making it to is certainly a tumultuous place with unusual volatility and a lot of downside swoons going on on a weekly basis.
vanek-Smith: I read that there were supposed to be more than a dozen tech IPOs this summer and now there are apparently only going to be four this month, which will make it a very sluggish month for IPOs. Why are other tech companies pulling out? I mean, is it the volatility?
Wolff: I think that the volatility, and also the investor sentiment. Everybody's fearful when they see markets swinging by 500 points -- and mostly to the downside. And this kind of markets scares away everyone -- good, bad, and ugly -- because it just doesn't look like the kind of place where you want to schedule your IPO. So it's a little bit like launching your new boat in a hurricane.
Vanek-Smith: Well, what has to happen for the tech sector to get it mojo back?
Wolff: We need to see some stabilization in the market. And the other thing that needs to happen is the general analyst community, the investor community, needs to be able to tell the difference between companies that are in the same space. In other words, the social media space has wildly profitable, incredibly exciting companies with whole new business models who are inventing their own sectors of the economy; and it has other companies doing moderately interesting things who've decided to call themselves social media companies because it's hot right now. It's a little bit dangerous to lump them all into the same folder, because you risk the sort of proverbial "baby going out with the bathwater."
Vanek-Smith: Max Wolff is chief economist with Greencrest Capital. Max, thank you for talking with us.
Wolff: My pleasure.