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Tech stocks: After LinkedIn, IPO boom likely

Tech stocks in the IPO pipeline include Facebook, Twitter, and Groupon. But tech stocks aren't the only high-quality IPOs waiting in the wings.

May 19, 2011

LinkedIn CEO Jeff Weiner and members of the company's management team ring in the opening of the New York Stock Exchange May 19, 2011, to celebrate LinkedIn's initial public offering. A long line of other tech stocks and nontech stocks are in the IPO pipeline.

Courtesy of NYSE Euronext

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By: Karina Frayter, CNBC Markets Producer

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Recent stock market volatility is unlikely to derail the recovery of the initial public offering (IPO) market, which boasts the biggest pipeline in 11 years, experts say.

“There are too many fundamentally high-quality companies in the pipeline—we haven’t seen this in years—and any effects of equity market volatility will be short-lived”, says Paul Bard, research director of IPO research and investment firm Renaissance Capital.

There are currently 175 companies waiting in the IPO pipeline, the largest amount since 2000, representing potential $40 billion in proceeds, according to Renaissance Capital. So far this year, 62 companies went public and 124 companies filed for an IPO, a 20 percent increase from last year.

Wednesday’s pricing of the highly-anticipated LinkedIn IPO at $45 is likely to spike activity in internet companies. The social networking site for professionals priced at the high end of the range, which was raised by 30 percent from its original level. The stock doubled in the first few minutes of trading Thursday.

“LinkedIn may be a tipping point for many that are watching on the sidelines”, says Bard. “This type of valuation may persuade many to take advantage of the momentum.” But not everyone will be met with the same demand, Bard warns. “Investors are selective.”

Peter Falvey, a Managing Director at Morgan Keegan, agrees: “(The) IPO market is very much a momentum market. LinkedIn should have positive impact on tech equity market”.

“Clearly, there is a strong interest from investors in digital media and e-commerce companies like Facebook, Twitter, Groupon and Zynga, as well as a host of smaller, fast growing companies. Each of them will execute very well received IPOs,” says Falvey.

The next big Internet IPO story will be Yandex, Russia's largest online search engine. It is set to raise $1.1 billion in a deal pricing next week.

“Yandex is a compelling offering”, says Bard. “It’s first direct opportunity for U.S. investors to play Russian internet market, and that can be a powerful driver of demand.”

Investor demand for Yandex shares has reportedly been so high that the company may finish taking orders earlier than scheduled. The company is expected to trade on Nasdaq under the symbol YNDX.