Q: Which recent Internet IPOs have been the best, and which ones were the worst?
A: Investors who thought the Facebook initial public offering would be their personal ATM were sorely disappointed.
Rather than soaring from their initial offering price, the shares landed with a thud. Shares of Facebook fb have lost 27% of their value from the $38-a-share IPO price.
While Facebook stock is off to a dubious start, it's not by any means the worst IPO even in recent history. A number of IPOs have fared much worse out of the gate.
In fact, Facebook reveals a somewhat disturbing fact: A growing number of IPOs are "breaking" their offering prices. An IPO is considered "broken" in Wall Street parlance when its current stock price falls below the offering price. When a deal breaks, it's considered to be a botched deal, or at least a sign of investors overpaying for a company that couldn't deliver on expectations.
Roughly 40% of the IPOs to hit the market over the past 12 months have seen their share prices fall below their IPO price. It's not a great trend for the market.
And among those broken deals, some are especially lackluster. The chart below shows the worst-performing IPOs based on their change from their IPO prices (based on May 30, 2012, closing prices):
• Zeltiq Aesthetics zltq 10/19/2011: -66%
• Vanguard Health Systems ( vhs 6/22/2011: -57%
• Horizon Pharma hznp 7/28/2011: -57%
• Groupon grpn 11/4/2011: -45%
• Taomee taom 6/9/2011: -44%
• C&J Energy cjes 7/29/2011: -40%
• Zynga znga 12/16/2011: -41%
• KiOR kior 6/24/2011: -41%
• Compressco Partners gsjk 6/15/2011: -35%
• Pandora P 6/15/2011: -34%
(Sources: IPOScoop.com, USA TODAY research)
So while the Facebook IPO is considered to be one of the larger flops, it's not, by any means, the worst deal for investors.
Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies and Fundamental Analysis for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at email@example.com. Follow Matt on Twitter at: twitter.com/mattkrantz