Tech IPOs – NYSE vs. NASDAQ
July 29, 2014
By Marc Fogarty, CPA, CFE
With several recent tech companies choosing to list their stock on the NYSE instead of the NASDAQ, I thought of Facebook's IPO stumbling blocks, and how their rocky market entrance may still be looming in the back of people’s minds. Is today's shift of technology IPO companies listing on the NYSE instead of on NASDAQ a direct result of the recent and highly publicized Facebook IPO difficulties, or could it be rooted in the lessons we learned from the rise and fall of the 2000 tech bubble?
My research for my recent blog about the Alibaba Group and their choice of the NYSE unearthed some interesting stats which may provide insight to what we are currently seeing in the markets.
- In the late 1990s, the majority of tech companies were listing with the NASDAQ exchange. At the same time, the NYSE had a reputation for larger, more stable companies on its roster.
- On March 10, 2000, the NASDAQ was at 5048 and at its year close it had fallen to 2292. That’s a decline of over 55% and the NASDAQ has not gone above 5000 since.
- In contrast, the DOW was at 11723 on January 14, 2000 and closed for the year at 10646. That’s only a decrease of about 10%.
- The NYSE during the same period showed even less of a decrease with 6870 on January 14, 2000 and 6785 at its year close. That’s just a little over a 1% decrease. These stats seem to point toward the NYSE’s relative stability during a reputed time of instability.
- During the financial crisis of 2008, both the NASDAQ and the NYSE took a hit, with their lowest points occurring in January 2009.
- But, if slow and steady wins the race, then the 5-year charts for both the DOW and the NYSE show a steady climb with both now at historic highs.
- In contrast, the NASDAQ is still slightly under their historic high that occurred during the bubble.
So for companies that are entering the public market, that are concerned about the possibility of another tech bubble, maybe it’s not NASDAQ’s recent Facebook drama but rather the NYSE’s more solid track record that’s driving tech companies their way.