Three energy companies that listed on Thursday failed to spark enough investor interest as initial public offerings of technology and luxury goods companies remain the flavour of the season. Bonanza Creek Energy Inc, which settled for selling fewer shares at a lower price, saw its stock end the day a fifth below its IPO price of $17.
Mid-Con Energy Partners was almost flat, while Laredo Petroleum rose 6 percent, after selling its stock for less than it had initially planned. Shares of luxury goods maker Michael Kors Holdings, on the other hand, closed 21 percent after high demand helped the company sell more shares for a higher price. The three energy companies entered the market on the heels of peer Sanchez Energy Corp, which also failed to find favour with investors on Wednesday, ending the day with its shares 17 percent below the issue price.
"None of these stocks had impressive debuts, and Sanchez Energy from yesterday was basically an early indicator that the energy sector was in serious trouble", said David Menlow, president of IPOfinancial.com. Shares of bigger peers like Kinder Morgan Inc and American Midstream Partners LP, which began trading earlier this year, are now trading below their IPO prices.
Groupon Inc's successful debut last month had raised hopes of other aspirants, and shares of Jive Software Inc and consumer review website Angie's List rocketed on their debut. Farmville maker Zynga Inc, which will price its offering later on Thursday, is expected to have a strong opening on Friday.
However, the market remains choosy about the stocks it welcomes. "Anything that has some sense of an internet or technology involvement is still attracting the attention of investors and that was what happened with Jive and what's expected with Zynga. This is a buyer's market and not every IPO can come into the market place," Menlow said.
Though Laredo Petroleum's shares bucked the trend by rising above its issue price, it had to settle for a lower payout as it sold the shares for $17, below the expected price range. "I think Laredo was the beneficiary of a cut that was viewed to be significant enough to compensate for the weakness in the sector", Menlow said. After Zynga's highly anticipated debut on Friday, curtains will fall on the US IPO market for the year.