How Badly Did Clearewire Hurt The IPO Market?

Clearwire (CLWR-NASDAQ) has done what some of the wildly bullish backers thought would not occur.  It has traded under the $25.00 IPO price today, which means technically that this HOT IPO traded as a BUSTED IPO.  It can close higher or lower than that $25.00 pricing and it will still have done some damage either way to other IPO’s on deck.  There are few that expect this one to fall apart because the need to raise extra cash has been telegraphed from the start, but the levels it opened at and the after-market action may take out some excitement.   The trading band in it is now $24.46 to $27.95 since the open. 

We had noted ahead of time that $28.00 seemed to be the prevailing opening level and it appears that $27.25 was the opening price.  That is pretty close, but some are already thinking this was a bit of a disappointment, and that was before the drop to under $25.00.

For this IPO to drop like this, it is going to put a lid on many of the other IPO’s.  Two "HOT" issues that are on the docket for tomorrow are Xinhua Finance Media and SourceFire.  We’ll follow up as these price, but if the HOT IPO turns out to not be so hot and even trade as a busted deal then it will put a lid on the appetite for other IPO’s in the immediate days after.

Here is the backgrounder for Xinhua Finance Media Ltd. (XFML-NASDAQ).  The fact that (Shanghai) China was to blame for most of the last sell-off, so the China-tie may also mute this one.  We still think this one has the leadership and is in the right spot to make a long-term run for those who can put on the rose-colored shades that look beyond the immediate time horizon.

Here is our note on SourceFire (FIRE-NASDAQ). 

Do not take this to be an interpretation that the CLWR IPO has killed the IPO market, but it will probably affect the appetite for these other two issues tomorrow and will be used as a reference point by any nay-sayers.  CLWR may very well close higher, but we already noted that calling UP/DOWN is the same as a coin toss today.  This just shows that certain IPO’s are not always a shoe-in like some traders hope.  As noted, this one has all the necessary earmarks for it to become a battleground stock.

The "IPO ETF" called the First Trust IPOX-100 Index (FPX ticker) is actually up 1$ at $22.47 for the day.  This one is very thin volume and may not an accurate representation.

Jon C. Ogg
March 8, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.