Time Standing Still for IPO Market

Since August, it has been a death march for IPOs. The last deal was on Aug. 16,
when the Chinese online video site Tudou (NASDAQ: TUDO ) went public. This is in
sharp contrast to the first half of the year, which saw many high-profile
offerings, such as from Pandora (NYSE: P ), Zillow (NYSE: Z ) and LinkedIn
(NYSE: LNKD ). Just how bad was the third quarter? Well, according to a report
from Thomson Reuters and the National Venture Capital Association, there were
only five venture-backed offerings a 77% drop from the prior quarter. The total
value came to a meager $442.9 million. All in all, it was the worst performance
since late 2009. But there was a silver lining to the quarter. That is, mergers
activity rose about 8%. Hey, if IPOs look shaky, why not try to sell out? But
even this market can sour pretty quickly. When there is an uncertain economy,
acquirers often hold back unless there is a compelling valuation. Confidence is
extremely important, but it is difficult to find of it much in today's
markets. Already, it looks like the much-ballyhooed Groupon deal might be pushed
out to next year if it ever gets done. So when can we expect things to get
better? Try six months maybe more. A big key will be a resolution of Europe
sovereign debt crisis. And while there appears to be progress in the euro zone,
a resolution probably will not be smooth or quick. In the meantime, the IPO
market needs some type of marquee deal to generate energy. It was thought this
might come from a Zynga offering, but even this deal looks troubled . The
biggest potential IPO is Facebook, which continues to grow across the world. The
problem? It looks like the company won't go public until a year from now. And
based on the trading across several online marketplaces, even its
secondary-market stock price has come under pressure during the past few months.
Tom Taulli is the author of "All About Short Selling" and "All About
Commodities." You can also find him at Twitter account @ttaulli. He does not
own a position in any of the stocks named here.