Within 12 hours, LoanDepot Inc. -- a fast-growing mortgage lender -- aborted its plan to go public, and Fitbit Inc. -- the maker of wearable devices -- priced a secondary stock offering below the previous day's close.
The stumbles don't bode well for high-growth companies that are planning to sell shares to the public soon, including Square Inc., the mobile-payments service led by Twitter Inc. Chief Executive Officer Jack Dorsey.
"Investors are likely not too keen on tech deals right now," said Tom Taulli, an independent IPO expert. "Probably not a good sign for Square."
U.S. equity markets have been unforgiving in the past month for companies seeking to go public -- even Ferrari NV is now trading below its initial public offering price after debuting at the high end of its range. Last month, three U.S. offerings faltered within about a week, with Digicel Group Ltd. canceling a sale, First Data Corp. pricing shares below a marketed range, and Albertsons Cos. postponing its offering.
Square is expected to price shares Wednesday. Match Group Inc., the operator of online dating sites Tinder, Match and OkCupid, is planning to price its IPO of as much as $466.7 million. The deal will include about 14 percent of the company's shares, and its parent, IAC/InterActiveCorp, will hold the rest.
The companies are selling into a market that hasn't gained much this year. Technology firms in the Standard & Poor's 500 index have risen about 3.7 percent this year through Friday's trading, compared with an 18 percent climb in 2014.
LoanDepot, backed by private-equity investor Parthenon Capital Partners, cited market conditions Thursday night when it canceled plans to sell as much as $540 million of stock to the public, hours before it was scheduled to set a price.
Fitbit, which had an IPO in June, will offer 3 million shares instead of the 7 million it previously planned in its secondary share sale, according to a filing Friday. The number of shares sold by existing stockholders remains unchanged at 14 million. The price of the offering, $29, is 8.5 percent lower than Thursday's close, sending the stock tanking as much as 14 percent.
"Investors' appetites for high-priced, young tech companies is declining, doubly so for companies whose insiders are cashing out," Erik Gordon, a professor at the University of Michigan's Ross School of Business, said in an email.
A spokesman for San Francisco-based Square declined to comment because the company is in a quiet period.
"Tech IPO prospects don't look very good until the market overall turns around," said Roger Entner, an analyst at Recon Analytics. "You are trying to grab a falling knife. It's extremely difficult to time this right now in a falling market."
Information for this article was contributed by Lily Katz of Bloomberg News.
Business on 11/14/2015