June 19, 2012

7 Biggest IPO Flops of Last 25 Years

Some big IPOs, like Visa and UPS, have been a boon to investors, but other big offerings have been squashed by their own weight

Worried investors watching stock board. (AP Photo) Worried investors watching stock board. (AP Photo)

Over the last 25 years there have been plenty of IPOs. The biggest recent one, of course, has been Facebook (FB), whose shares have sagged more than 25% since their opening price of $38. Of course there's still time for Facebook to turn around so it's not on this list—yet. With that IPO in mind, S&P Capital IQ issued its list of the largest IPOs of the last quarter century by gross offering. Some, like Visa, UPS and Kraft Foods, have been great for investors.

That was interesting to see, but AdvisorOne looked at the list with a twist. We wondered which IPOs were the worst deals for those initial investors. Out of the 25 on the list, we found the seven that have suffered the biggest drop in stock price from their inception to June 15 of this year.

Here’s the countdown from the smallest losses to the biggest:

These Boeing The fuselages were built by Spirit AeroSystems. (AP Photo)

(These Boeing fuselages on rail cars were built by Spirit AeroSystems. AP Photo)

7. Spirit AeroSystems Holdings Inc. (SPR)

Stock Price Drop Since IPO: 10%

Gross IPO Offering: $1.43 billion

This company, which makes aerostructures for commercial aircraft and is part of the Canadian investment firm Onex, went public in 2006. The IPO went well, settling at an average price of $26, slightly better than the company’s projections. It was as low as $14.27 a year ago, but has bounced back to over $23.

HCA headquarters in Nashville, Tenn.

(HCA headquarters in Nashville, Tenn.)

6. HCA Holdings Inc. (HCA)

Stock Price Drop Since IPO: 13%

Gross IPO Offering: $3.79 billion

When the biggest private hospital group went public in May 2011, the going price was $30 per share. That didn’t last long as the share price dipped to $17.03. Investors had to be wondering if there was any hope. Maybe there is, after all. Shares bounced back this month to $26 and change.

GM CEO Daniel Akerson. (AP Photo)

(GM CEO Daniel Akerson speaking to media before a shareholder meeting
on June 12. AP Photo)

5. GM (GM)

Stock Price Drop Since IPO: 33%

Gross IPO Offering: $15.77 billion

In November 2010, the mega-auto company went public, with a gross offering that was the third biggest behind Facebook and Visa. Since GM has reaped billions in profit, you might think that would make its IPO a winner—not so fast. The stock price this month was one-third below its opening price of $33. It’s taken such a beating that CEO Dan Akerson apologized to shareholders and vowed to get the stock price headed in the right direction.

Lobby of Huntsman headquarters in Salt Lake City. (AP Photo)

(Lobby of Huntsman headquarters in Salt Lake City. AP Photo)

4. Huntsman Corp. (HUN)

Stock Price Drop Since IPO: 44%

Stock Price Drop Since IPO: $1.39 billion

When Hunstman, a petrochemical company, went public in 2005, the first day was a good one. The stock rose 6.5% above the IPO price of $23. It’s been downhill since, with the stock trading at about $13 per share these days.

Philip Sherringham, CEO of People's United (Courtesy People's United)

(Philip Sherringham, CEO of People's United Financial. Photo courtesy PUF)

3. People’s United Financial Inc. (PBCT)

Gross IPO Offering: $3.44 billion

Stock Price Drop Since IPO: 44%

People’s United, a commercial bank based in Bridgeport, Conn., decided to go public in 2007. Their initial offering was worth $3.4 billion at $20 per share. The stock currently trades at about $11.50 per share. 

CEO Mike Frazier of Genworth (AP Photo)

(CEO Mike Frazier of Genworth. AP Photo)

2. Genworth Financial Inc. (GNW)

Stock Price Drop Since IPO: 74%

Gross IPO Offering: $2.83 billion

The Genworth family of insurance and financial services companies went public in 2004 at an offering price of $19.50. After an initial bump in price, the last several years have seen the stock price plummet, falling to just over $5, with a nearly 50% drop in the last year alone. 

(USEC's American Centrifuge plant in Piketon, Ohio.)

(USEC's American Centrifuge plant in Piketon, Ohio.)

1. USEC (USU)

Stock Price Drop Since IPO: 93%

Gross IPO Offering: $1.43 billion

The United States Enrichment Corp. went public in 1998. The company, which provides low enriched uranium for commercial nuclear power plants, offered its first shares at $14.25 each. The price is now hovering around $1. Yes, $1. The company's stock was pummeled by the anti-nuclear backlash after last year's earthquake and tsunami in Japan severely damaged the Fukushima nuclear plant. But investors, take heart! USEC has mounted a comeback since last year when the stock was at 64 cents per share—a more than 50% "surge."

In its defense, a USEC spokesman said that unlike most IPOs, the company received none of the proceeds of selling common stock to investors and that the U.S. Treasury was the sole beneficiary of the IPO in 1998.

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