Are technology IPOs a better investment than the market? Are technology IPOs more attractive than investing in a broad market index? This viz answers those questions by taking a look at a large sample of software companies that went public between 1969 and 2008.
About this Viz
The average software IPO in the sample beat the Nasdaq by 52% after one year and 94% after two years. Impressive performance compared to most other investment options.
Nearly half (46%) of the IPOs underperformed the Nasdaq during their first year as a public company. The large variance in the sample is shown in the lower visualization (red/green). Forty-six percent of those lines are red, meaning they underperformed the Nasdaq in year one. The situation improved a little by year two, at which time 40% had underperformed the Nasdaq.
Buying the Nasdaq index, at least initially, would have been a more fruitful investment nearly half the time.
