Companies delay IPO due to Facebook, Euro crisis

Traders work on the floor of the New York Stock Exchange May 23, 2012 in New York City. Several companies such as Kayak and Formula One have delayed their IPO's in the wake of Facebook's stock flop.

David Brancaccio: In recent days there has been news of companies delaying their Initial Public Offering, or IPO. Yesterday discount travel website Kayak announced it’s putting off going public. In the UK, luxury jeweler Graff Diamonds has made a similar move, and today Formula One announced it’s shelving its IPO.

For more on this trend we turn to Christopher Werth in London.


 

Christopher Werth: To understand the recent hesitation to begin trading publicly, Angus Campbell of London Capital Group Holdings says you need to know a bit of British terminology: “damp squib”.

Angus Campbell: A damp squib is basically something that has completely fallen through. It would be disappointing. It would be very, very annoying.
Werth: What would an IPO look like if it were a damp squib.
Campbell: It would look like Facebook.

Campbell says Facebook’s belly flop last week has scared off companies and investors alike.

But Rupert Nathan at the stock brokerage Fat Prophets says the main driver is global worries about the eurozone crisis, and a slowdown in China and elsewhere.

Rupert Nathan: The thinking could be let’s wait, let’s wait for the storm to pass, and we can then come back and hopefully get a better price than we previously would have done.

Which may be a good call. All told, the amount raised from IPOs has slumped by 46 percent since last year.

In London, I’m Christopher Werth for Marketplace.

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