Tech IPO’s Sudden Disappearance

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Two months ago, a reputed cloud storage company was really excited about its IPO. Now they have suddenly disappeared and there is no news about the IPO. What about other tech companies? Are they also refraining from conducting IPOs? They should be because these days tech stocks have lost their popularity.

Twitter, which is one of the biggest social media platforms has seen a decrease in its share price. In fact, it can be regarded as the lowest ever decline ever since the company was incepted. Twitter is not the only one going through this. All tech companies have nothing to boast about because they are not earning enough returns these days. As for the index, that has decreased by around 7%.

Are you surprised to hear this? You may be, but the industry experts had already predicted this, and the situation comes as no surprise to them. They also believe that in the time to come, even more companies will go quiet about their upcoming IPOs.

The cloud storage company which had an IPO scheduled in the time to come is Box. Like all other tech firms, the company was in a loss worth $169 million last year. The year before that it was $112 million, and previously it was just $5 million. Notice the sharp rise in losses.

Now let us talk about Twitter. In the first quarter of this year, Twitter earned revenue which was worth $250 million. This was no more than the figures reported for the same period last year. As for losses, the recorded value is $132 million, and this has increased by five times when compared to last year.

An industry expert told us that investors had lost their liking of tech stock and the reasons behind this were fairly justified. She went on to add that in the year 2014, 24 techs IPOs had been conducted, which had produced a combined return of -16.5%.  As for the new offerings, they have been 13 in number and of these 10 companies attempted to get amounts higher than what the investors wanted to pay.

The industry expert added that for tech companies, the situation had changed in March.  Since the recent past has shown so many losses, investors are not really interested, especially since the companies are trying to get higher prices.

Source: www.inc.com

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