In the final analysis, doing an IPO isn't about getting a huge stock run-up in first-day trading.
It's about getting cash.
That would explain why despite a more muted reception from investors, plenty of companies are still going ahead with initial public offerings.
Most companies going public next week haven't seen share prices double or triple their first day out, as was commonplace in February and early March. At the same time, no one seems to see that as a reason to pull or postpone their planned debuts.
"It's sort of going back to more traditional performances for IPOs. You'll always have the deals that come from time to time and break all the records, but you don't see those every day," said Corey Ostman, chief technical officer at AlertIPO.
Still, it's not as if things have quieted down entirely.
Friday's action-packed IPO session proved that the tech stock sell-off earlier this week hasn't put the brakes on the IPO market. Seven companies made their debuts the same day, with varying results.
Winners in the stock run-up category were Saba Software (SABA), and Numerical Technologies (NMTC), which both more than doubled in first-day trading. Laggards of the day included GoAmerica (GOAM), which opened flat, and Lexicon Genetics (LEXG), which dropped 20 percent in first-day trading.
That mixed reception from investors will set the tone for next week, when close to 20 companies are planning initial stock offerings in areas including biotechnology, telecommunications, and, of course, the Internet.
Vincent Slavin, an institutional trader at Cantor Fitzgerald said he expect a warm investor reception for speech recognition software developer Nuance Communications, Internet consultant Zefer, and data mining firm iSky.
Judging by the number of offerings, biotech promises to be one of the most active sectors next week. Pharmaceutical and genetics firms planning offerings next week include genetics research firm Exelixis, drug developer Rigel Pharmaceuticals, and Genomic Solutions, which makes software and equipment for gene analysis, among others.
Whether high volume will translate into large profits, however, is another issue.
"This is going to be very short-lived," said David Menlow, president of IPOFinancial.com, of the recent glut of biotech newcomers. "The market can withstand a few offerings, but not as many as are expected to come this month."
Menlow's pessimism extends beyond biotech. Investors who are disappointed that this week's offerings weren't instant jackpot winners are in for a bigger shock. He expects the entire IPO market is in for a dramatic slowdown in the not-too-distant future.
The reason: Even with new issues entering the market at a fast clip, there's still a huge backlog of dot-com and tech startups waiting to go. There will be too many companies on the market that look too much alike, and investors won't be able to support them all. The end result, according to Menlow:
"There's more pain around the corner."
