IPO boom another sign of economic recovery

A reporter waits for the share price of Facebook to start trading at the Nasdaq stock market moments before it went public on May 18, 2012 in New York.

The stock market is booming and there's no shortage of companies hoping to get in on the action. This year, there've been 116 initial public offerings or IPOs -- companies looking to sell stock to investors for the first time. That's up about a third from this time last year. And there were twelve more IPOs this week alone.

It comes down to the F-word: Facebook.

"IPO, for about a year and a couple of months was a dirty word [in] Silicon Valley. People looked at the reception Mark Zuckerberg got and they said, that's not for me," says analyst Josh Brown, vice president of investments at Fusion Analytics.

Earlier this week, Facebook share prices closed about $38 -- the highest they've been since the company's first day of trading in May 2012.

That's encouraged other tech companies to take themselves public, but Brown says not all the IPOs we've seen this year are tech companies. Many of them are older established companies that are going public to fuel growth. And IPOs based on growth are a positive sign, too, says Brown. He dismisses any comparisons between this recent surge in IPOs and the dot-com bubble of the 1990s.

"I would say this is extraorindarily healthy activity for the early stages of an economic recovery," says Brown.

About the author

Josh Brown is a New York City-based financial adviser at Fusion Analytics.

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