University of Florida Study Demonstrates an Uptick of Unprofitable Companies in 2018 Filing IPOs

Posted on October 4th, 2018 at 11:52 AM
University of Florida Study Demonstrates an Uptick of Unprofitable Companies in 2018 Filing IPOs

From the Desk of Jim Eccleston at Eccleston Law LLC:

University of Florida finance professor, Jay Ritter has released a study examining the financial health of companies in 2018 before they filed Initial Public Offerings (IPOs) and compared the data to other years dating back to 1980.

Overall, the study has demonstrated that this year so far has had the highest percentage of money-losing companies filing IPOs. More specifically, according to the study, 83 percent of U.S. companies that have gone public this year have been unprofitable in the 12 months leading up to their IPOs. Significantly, the only year where this percentage was comparable to 83 percent, was 2000, at the height of the dot-com bubble.

The University of Florida study also examined how unprofitable companies fared years after their IPOs were filed. The study found that between 2001 and 2016, money-losing companies fared worse in the long run. The study established that the 3 years after the money-losing companies filed their IPOs, they underperformed the market by 9.7 percent.  In contrast, companies that were profitable before their IPOs profited several years after, at an average of 30.4 percent.

The attorneys of Eccleston Law LLC represent investors and advisors nationwide in securities and employment matters. The securities lawyers at Eccleston Law also practice a variety of other areas of practice for financial investors and advisors including Securities FraudCompliance ProtectionBreach of Fiduciary DutyFINRA Matters, and much more. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today.

Related Attorneys: James J. Eccleston

Tags: eccleston, eccleston law llc, james eccleston, raymond james, university of florida, IPOs, financial investment

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