Are IPOs (Initial Public Offering) still outperforming the market? Evidence from Spain in the period 2000 to 2010

This paper analyzes the profitability of Spanish IPOs (initial public offering) in the period 2000-2010 both in absolute terms and relative to the IBEX (International Business Exchange) network in two specific moments: one in the short term, one month after the first trading day, and another one that could be considered as medium term, one year after the company goes public. The results show that 18 of the 38 companies surveyed (47.8%) obtained lower values than those of the IBEX one month after the IPO, being the performance of the stock price independently of the IBEX very similar (50% of negative events). Taking as reference the year after the date of the IPO, the result obtained is slightly different: while the comparison ratio with the IBEX as a benchmark is maintained at the same level (47.8%), the ratio of independent performance rises to the value of 60.5% of firms with negative returns. After analyzing these results, it can be said that the Spanish IPO outperform slightly the rest of the market in the short term, but this good performance is gradually diluted to the point that a year later more than half of the analyzed companies lose that outperformance, which becomes underperformance.