Some Factoids About the 2005 IPO Market
Jay R. Ritter
Cordell Professor of Finance
University of Florida
352.846-2837 voice
http://bear.cba.ufl.edu/ritter
April 9, 2006
This document will be updated ( I recently discovered one follow-on offering that had been
classified as an IPO).
161 operating companies went public in the U.S. in 2005, almost as many as in 2004, and the second
highest number since 2000. A higher volume figure has been reported in many sources (as many as 266
counting all offerings), but the higher numbers typically include banks and S&Ls (8 offerings),
partnerships (7), ADRs (13), REITs (11 offerings), unit offers (7 offerings), acquisition companies (15
offerings, all after June 27), IPOs with an offer price below $5.00 (0), and closed-end funds (44
offerings), as well as (mainly domestic) operating companies.
1
Table 1
Mean First-day Returns and Money Left on the Table, 1990-2005
The sample is IPOs with an offer price of at least $5.00, excluding ADRs, unit offers, closed-end funds,
REITs, partnerships, banks and S&Ls, and stocks not listed on CRSP (mainly foreign firms going public
in the U.S. without ADRs). If foreign IPOs are included, the amount of money on the table increases.
Proceeds excludes overallotment options, but includes the global offering size. The amount of money left
on the table is defined as the offer price to closing market price on the first-day of trading, multiplied by
the number of shares offered (excluding overallotment options) on a global basis.
Mean First-day Return Aggregate
Number Equal- Proceeds- Amount Left Aggregate
Year of IPOs weighted weighted on the Table Proceeds
1990 104 10.8% 8.1% $0.33 billion $4.08 billion
1991 273 12.1% 11.2% $1.38 billion $12.28 billion
1992 385 10.2% 8.1% $1.71 billion $20.97 billion
1993 483 12.8% 11.4% $3.20 billion $28.16 billion
1994 387 9.8% 8.5% $1.39 billion $16.24 billion
1995 432 21.5% 17.8% $4.34 billion $24.46 billion
1996 621 16.7% 16.1% $6.53 billion $40.65 billion
1997 432 13.9% 14.7% $4.27 billion $28.97 billion
1998 267 22.3% 15.5% $4.98 billion $32.20 billion
1999 457 71.7% 56.8% $35.63 billion $62.69 billion
2000 346 56.1% 44.2% $26.77 billion $60.54 billion
2001 76 14.4% 8.9% $2.97 billion $33.97 billion
2002 67 8.9% 5.1% $1.13 billion $22.11 billion
2003 62 12.1% 10.5% $1.01 billion $9.58 billion
2004 179 12.1% 12.1% $3.88 billion $32.04 billion
2005 162 10.0% 9.3% $2.65 billion $28.37 billion
1990-2005 4,733 22.9% 22.4% 102.17 billion $457.3 billion
2
Table 2
Mean First-day Returns, Categorized by Sales, for IPOs from 1980-2005
Sales, measured in millions, are for the last twelve months prior to going public. All sales have been
converted into dollars of 2003 purchasing power, using the Consumers Price Index. There are 6,854
IPOs, after excluding IPOs with an offer price of less than $5.00 per share, units, REITs, ADRs, closed-
end funds, banks and S&Ls, firms not listed on CRSP within six months of the offer date, and 140 firms
with missing sales. The average first-day return is 18.5%.
1980-1989 1990-1998 1999-2000 2001-2005
Return N Return N Return N Return N
0sales 60%
60%
4
Table 3
IPO Turnover Categorized by Decade and First-Day Return, 1983-2000
IPOs with an offer price below $5.00 per share, unit offers, ADRs, closed-end funds, REITs,
bank and S&L IPOs, and those with missing volume numbers on CRSP are excluded. Turnover
is defined as first-day CRSP trading volume divided by number of shares issued. For NYSE and
Amex-listed IPOs, the trading volume is doubled to allow more meaningful comparisons with
Nasdaq-listed IPOs. If the first-day turnover is less than 0.2%, the observation is deleted. IPOs
before 1983 are not included because CRSP has volume for very few of these stocks.
For Republic Airways Holding (20040526), the CRSP volume of 131,952 is replaced with Bigcharts volume of 1,203,600; and for Nucryst
Pharmaceuticals (2051222), the CRSP volume of 49,056 is replaced with Bigcharts volume of 714,500.
Panel A: Percentage of IPOs with Turnover Greater Than 100%
Number Percentage with Percentage of
Time Period of IPOs Turnover>100% IPOs on Nasdaq
1983-1989 1,696 1.8% 86%
1990-1998 3,519 23.5% 83%
1999-2000 808 74.9% 91%
2001-2005 545 33.9% 66%
Total 6,568 25.1% 83%
Panel B: Average Turnover Categorized by First-Day Returns
Number Average First- Average
Return Categories of IPOs Day Returns Turnover
Return 60% 450 121.1% 177.3%
Total 6,568 18.7% 71.5%
Panel C: Average Turnover Categorized by First-Day Returns & Decade
Return Categories 1983-1989 1990-1998 1999-2000 2001-2005
Return 60% 51.7% 148.6% 200.0% 177.6%
Total 34.1% 69.8% 148.7% 84.7%
5
Table 4
Median Age and Fraction of IPOs with VC backing, 1980-2005
IPOs with an offer price below $5.00 per share, unit offers, ADRs, closed-end funds, partnerships, acquisition
companies, REITs, bank and S&L IPOs, and firms not listed on CRSP within six months of the offer date are
excluded. Missing numbers are supplemented by direct inspection of prospectuses on EDGAR, information from
Dealogic for IPOs after 1991, and Howard and Co.’s Going Public: The IPO Reporter from 1980-1985. Tech stocks
are defined as internet-related stocks plus other technology stocks, not including biotech. Loughran and Ritter
(2004) list the SIC codes in their appendix 3 and sources of founding dates in appendix 1. Age is defined as the year
of the IPO minus the year of founding. Age is available for 6,747 firms. VC-backed firms exclude private equity
firms that are mainly buyout firms, but especially in 2004-2005 there is a lot of arbitrariness in deciding what is a
VC fund vs. what is non-VC private equity.
Number Median Percentage Number of Technology IPOs
Year of IPOs Age VC-backed VC-backed IPOs Number % VC-backed
1980 70 6 33% 23 18 67%
1981 191 8 29% 56 63 41%
1982 77 5 27% 21 36 36%
1983 442 7 26% 117 155 39%
1984 172 7 27% 47 38 55%
1985 179 8 25% 44 28 54%
1986 378 8 23% 88 71 44%
1987 271 7 28% 75 57 65%
1988 97 8 34% 33 26 65%
1989 105 7 39% 41 29 62%
1990 104 9 46% 48 26 81%
1991 273 9 51% 138 60 72%
1992 385 10 47% 182 94 76%
1993 483 8 46% 223 106 79%
1994 387 7 35% 137 94 59%
1995 432 7 44% 191 176 64%
1996 621 7 43% 265 229 63%
1997 432 8 30% 130 144 49%
1998 267 7 29% 77 102 50%
1999 457 4 59% 271 351 69%
2000 346 6 62% 216 225 68%
2001 76 12 53% 40 23 74%
2002 66 15 29% 19 20 55%
2003 63 11 37% 23 17 53%
2004 179 8 48% 83 58 69%
2005 162 11 33% 53 45 56%
1980-1989 1,982 7 27% 545 521 47%
1990-1994 1,632 8 44% 728 380 71%
1995-1998 1,752 7 36% 663 651 53%
1999-2000 845 5 59% 487 576 66%
2001-2005 538 10 40% 218 163 62%
1980-2005 6,749 7 39% 2,641 2,291 61%
6
Table 5
Number of U. S. IPOs with an offer price of greater than $5.00
that doubled (offer to close) in price on the first day of trading:
Quarter Number
1997, first 0
1997, second 2
1997, third 0
1997, fourth 0
1998, first 0
1998, second 2
1998, third 3
1998, fourth 7
1999, first 19
1999, second 24
1999, third 26
1999, fourth 48
2000, first 48
2000, second 9
2000, third 19
2000, fourth 1 (Transmeta)
2001, first 0
2001, second 0
2001, third 0
2001, fourth 0
2002, first 0
2002, second 0
2002, third 0
2002, fourth 0
2003, first 0
2003, second 0
2003, third 0
2003, fourth 0
2004, first 0
2004, second 1 (Jed Oil)
2004, third 0
2004, fourth 0
2005, first 0
2005, second 0
2005, third 0 (Baidu.com is not counted because it is an ADR)
2005, fourth 0
7
Table 6
Number of Initial Public Offerings, First-Day Return, and
Revisions from the File Price Range by Cohort Year, 1990-2005
Percentage Percentage Percentage Percentage
Cohort Number First-day of IPOs with of IPOs in of IPOs with
Year of IPOs Return OP > Hi the Middle OP $5 Doubling in Price on the First Day of Trading by
05
,f
irs
20 t
05
,t
hi
rd
17
Mean and Median Public Float as a Fraction of Post-Issue Shares Outstanding
40%
mean median
35%
30%
25%
20%
15%
10%
5%
0%
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
18
Average First-Day Return and Aggregate Amount Left on the Table, 1980-2005
40.00 80
35.00 70
30.00 60
25.00 50
US$ Billions
Percent
20.00 40
15.00 30
10.00 20
5.00 10
0.00 0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Aggregate Money Left on the Table (in $ Billions) Average First-Day Return (Equal-Weighted)
19
First-Day Return and Revisions from the File Price Range, 1990-2005
Percentage of IPOs with OPHi
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
20
Number of Offerings and Average First-Day Return, 1980-2005
800 80.0%
700 70.0%
600 60.0%
Average First-Day Return
Number of Offerings
500 50.0%
400 40.0%
300 30.0%
200 20.0%
100 10.0%
0 0.0%
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
Number of Offerings Average First-Day Return
21