Capital Investment Advisors

What to Expect: The IPO Market in 2014

In a recent article by Atlanta Business Chronicle, Wes Moss weighed in with his perspective on what to expect from the IPO market in 2014.

A good equity market and high-profile initial public offerings are fueling an already hot IPO market, which experts say will continue through the remainder of the year and into 2014.

Wes Moss, chief investment strategist at Capital Investment Advisors, is interested in the vintage of the companies coming to market. Back in 1999, “the poster child of excess,” he said, research showed the average price valuations for IPOs were 26.5 times sales, where today they are 5.6 times.

“It kills you because investors are paying one-fifth the price for the same dollar of sale than they were in 1999,” said Moss, who is also host of “Money Matters” on News/Talk WSB.

In addition, companies going public today are averaging 13 years old rather than the average age of 4 for companies in 1999.

Moss likes that kind of “longer vintage” because it means the company also weathered a tough economy.

He sees the health of companies that have emerged following the stock market collapse and the housing crash, and in order to go public, they have to really be growing and attractive.

“Not only have they had to survive, but thrive though the desert,” Moss said. “I like the types of companies going public today [more] than in the 1999 bubble.”

There have been some IPO “disasters,” such as Groupon Inc. in 2011, which had a multibillion-dollar market cap, and in 2013 is up 94 percent, but between that time and its IPO, Moss said investors lost some 80 percent of their money.

He calls Groupon “a hot consumer fad,” and says companies like Facebook can’t replicate 1 billion people addicted to it or that Twitter Inc., which went public on Nov. 7 at $26 and closed up 73 percent on the first day of trading, is not just a fad, but an entirely new media service. All of that is very different than what investors saw in 1999, he said.

Moss is looking forward to seeing if Atlanta-based mobile device management company AirWatch LLC goes public.

“It’s going to be the next great company coming out of Georgia, and likely to be the next IPO,” he said.

It was reported that the company was talking to investment bankers about a possible IPO, but has not filed yet.

Read more in The Atlanta Business Chronicle.

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