stock during its public offering in early May saw a 163% pop on the first day, setting a new record and a celebratory tone for a busy IPO season which has seen half a dozen high-value companies enter the public markets.
While new heights may indicate that things can only go downhill from there, UBS analyst Jason Draho thinks it's too early to call the IPO market a bubble, Draho wrote in a note published Monday. "Triple-digit returns beg the question of whether another IPO bubble is forming. It's fair to say that the IPO market is getting warmer just based on the returns," Draho said.
"That's also when six-month lock-up agreements begin to expire, enabling pre-IPO shareholders to start selling in large scale, potentially putting downward pressure on stock prices," Draho said."All this suggests a runway of about six more months for this hot IPO market, after which it could continue or sputter out, depending on how the current IPOs perform."