U.S. Immigration focus on U.S. economic trends: A tech stock IPO boom, unseen for many years, has re-emerged, with cybersecurity firm FireEye and advertising data analytics company Rocket Fuel soaring on their first day of trading.
An increasing number of market participants believe that U.S. stock investors seem to have regained the enthusiasm for tech stocks seen in 1999. In such a market atmosphere, the prospects for the upcoming IPO of social media giant Twitter are worth anticipating.
Promising Industry Outlook
FireEye and Rocket Fuel successfully debuted on the U.S. stock market last Friday. FireEye's stock price soared by as much as 100% at one point, eventually closing at $36, an 80% increase over its initial public offering (IPO) price of $20. With this, FireEye's market capitalization reached $1.2 billion, three times the market's earlier expectations. Rocket Fuel's IPO price was $29, and it closed at $55, a gain of 90%, bringing its market capitalization to $6.5 billion. The eye-catching performance of FireEye and Rocket Fuel also boosted related sectors in the A-share market, with companies like Insigma and Sunway Tech hitting the daily limit.
FireEye and Rocket Fuel are both innovative companies in the technology industry. FireEye was founded in 2004 and uses cloud technology to develop security systems capable of defending against a new generation of cyberattacks. FireEye CEO DeWalt previously served as the CEO of antivirus software company McAfee and participated in the entire process of Intel's $7.6 billion acquisition of McAfee. George Kurtz, CEO of cybersecurity firm CrowdStrike, stated that FireEye's strong first-day performance has boosted investor confidence in the cybersecurity sector.
Rocket Fuel was founded in 2008 and possesses a big data advertising platform that improves ad reach through technologies such as artificial intelligence. According to promotional materials on the Rocket Fuel website, the company is the "fastest-growing advertising technology company in Silicon Valley."
The surge of FireEye and Rocket Fuel on their first day of trading shows that investors are optimistic about the high growth potential of the industries in which both companies operate. However, both companies have yet to move past their loss-making situations. Data shows that FireEye lost $67.2 million in the first half of this year, and Rocket Fuel lost $3 million last year.
Adding More Fuel to U.S. Stocks
After learning lessons from the IPO of social media giant Facebook, U.S. stock investors seemed to have lost interest in internet-concept stocks, as these tech stocks were highly touted before listing but were met with cold shoulders after listing due to unsustainable profit models or valuation issues. Data from market research firm Dealogic shows that only 16% of new U.S. listed companies in the first eight months of this year came from the technology and internet industries, a proportion likely to hit a low not seen since 1993. In 1999, the peak of the internet bubble, tech companies accounted for 69% of all new listings.
However, the eye-catching performance of FireEye and Rocket Fuel on their first day of trading may reignite investor enthusiasm for emerging tech companies, and the sharp rise in the two companies' stock prices will also provide a certain boost to the upcoming Twitter IPO.
Jack Ablin, Chief Investment Officer at BMO Harris Private Bank, stated that market demand for tech company IPOs is an important indicator for measuring investor enthusiasm. Analysts have noted that historical data shows the overall rise of the stock market is often accompanied by a boom in tech company IPOs, and the listings of FireEye, Rocket Fuel, and Twitter signal that U.S. stocks are set to welcome a new round of upward momentum.
Other news indicates that Chinese chip supplier Montage Technology is preparing to launch an IPO on NASDAQ, aiming to raise up to $115 million. In the first half of this year, Montage Technology has already achieved profitability.
