The popping sound you heard Friday was Vonage (NYSE: VG) cracking open Champagne bottles. The Web-based phone service has finally been dethroned as the country's biggest botched IPO.

BATS Global Markets -- the company behind the BZX Exchange -- wasn't going to wow the market. The stock's debut was priced at $16 on Thursday night, at the low end of its initial $16 to $18 pricing range.

Just minutes before the country's third largest exchange operator was set to begin trading publicly, an alert went out on its website. The company was "investigating system issues" in the trading of stocks in the ticker symbol range from A through BF.

That included BATS itself, but -- more importantly -- Apple (Nasdaq: AAPL). A few moments later, a single trade for 100 shares of Apple was executed through BATS 9% lower than where the tech giant was perched, triggering circuit breakers to temporarily halt trading in the shares.

BATS isn't the only exchange where a technical snafu or a fat-fingered trade can wreak havoc that is eventually reversed, but the timing couldn't have been worse. Shortly after BATS hit the market, some trades were reported as much as 90% lower.

"In the wake of today's technical issues, which affected the trading of certain stocks, including that of BATS, we believe withdrawing the IPO is the appropriate action to take for our company and our shareholders," BATS CEO Joe Ratterman announced, effectively canceling its own IPO and nullifying all of the trades on shares of BATS Global Markets that had occurred during its brief tenure as a publicly traded company.

BATS may give it another go after the public has had enough time to forget about Friday's comedy of errors, but it will be a name that's ridiculed more than praised for what the fast-growing exchange had accomplished in the years leading up to its IPO.

Bon Vonage
Vonage went public six years ago. There was plenty of hype leading up to its offering, but the excitement had died in light of its uninspiring financials. The stock managed to price its offering at $17. Two trading days later, it was trading below $13. Within weeks, it slipped into the single digits -- and that's exactly where the stock has remained over the past six years.

Sadly, a busted IPO is a common sight. The real reason why Vonage's IPO was a disaster was because it saved a chunk of its IPO shares for its customers. After seeing many ballyhooed IPOs take off -- and sensing a little confirmation bias since it was their own phone service going public -- many Vonage subscribers decided to give it a shot. When the stock tanked at the open, many refused to pay up.

We can all agree that "buyer beware" makes the greedy Vonage customers deadbeat chumps here, but Vonage committed the mother of all public relations disasters by going after its customers to pay up.

But, hey, at least the Vonage IPO wasn't rescinded. The stock price may be trading at Happy Meal prices, but at least there's a reason to be optimistic given the past five quarters of meaty profitability at Vonage.

All the young dues
Friday's collapse of BATS put an end to an otherwise successful week on the IPO front.

  • ExactTarget (NYSE: ET) -- an email marketing and digital communications specialist -- priced its IPO at $19 on Wednesday night. The shares opened at $23.05 on Thursday, closing out the week at $26.32.
  • Vantiv (NYSE: VNTV) -- a provider of payment processing services -- hit the market at $17. It opened at $19, closing out the week at $19.70.
  • Caesarstone (Nasdaq: CSTE) wasn't as fortunate. The Israeli-based maker of engineered quartz surfaces priced at $11, opening essentially flat at $10.99 and closing out the week at $11.01.

If it wasn't for BATS and its colossal fumble, it would have been another good week after a strong February and equally robust March.

The BATS deal is a flop of historical -- if not hysterical -- proportions, but the general health of the IPO market hasn't been this sharp in years.

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