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

Return to Archive

TESTIMONIALS

Previous
Next

I am grateful to have found an outstanding law firm that specializes in securities matters. My lawyers were extremely knowledgeable, diligent, and are skilled litigators. No stone was left upturned. As a result of their experience and tenacity, the arbitration proceeding was dismissed in my favor.

Michael E.

LATEST NEWS AND ARTICLES

December 23, 2024
Understanding Alternative Investments and Risk Management

Alternative investments once again are gaining traction, according to a recent article in InvestmentNews

December 20, 2024
FINRA Sanctions Over 60 Advisors for Continuing Education Violations

FINRA has disciplined 62 advisors for cheating on New York’s continuing education (CE) requirements tied to insurance license renewals. 

December 19, 2024
GPB Capital Investors See Progress as Court Confirms Receivership

In a significant development for investors in GPB Capital Holdings, the private equity firm will move into receivership following a prolonged legal battle.