VentureBeat has posted an analysis of the performance of the venture-backed initial public offerings from 2010-2011. In its article "Buying IPO Stock? Might as well forget about rich returns" VentureBeat finds that venture IPO returns have lagged the S&P500. Here's the link: http://venturebeat.com/2012/02/14/buying-ipo-stock-might-as-well-forget-about-rich-returns/
The methodology for this analysis is flawed in my view. First the S&P 500 return from 1/1/2010 to 1/15/2012 is found to be 15.5%. Then the return for each venture-backed IPO is evaluated by the IPO price taken on the date of the IPO and the closing price on 1/15/2012. This analysis in my opinion is flawed because the timeframes for the returns don't match. To me, it would be more interesting to evaluate the return of each IPO for 180 days (when the lock-up expires) or 180 days after the IPO, and compare that return for the same dates. In this way one compares apples and apples. The result may be the same, but I believe it would be a more accurate barometer.
The methodology for this analysis is flawed in my view. First the S&P 500 return from 1/1/2010 to 1/15/2012 is found to be 15.5%. Then the return for each venture-backed IPO is evaluated by the IPO price taken on the date of the IPO and the closing price on 1/15/2012. This analysis in my opinion is flawed because the timeframes for the returns don't match. To me, it would be more interesting to evaluate the return of each IPO for 180 days (when the lock-up expires) or 180 days after the IPO, and compare that return for the same dates. In this way one compares apples and apples. The result may be the same, but I believe it would be a more accurate barometer.
