China Gets No IPO Love

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

It took China six months to get back on the stateside-listed IPO bandwagon, but the wheels keep coming off.

Last week's market debut from China Mass Media (NYSE: CMM  ) went over about as well as the previous week's IPO from e-learning enabler China Distance Education Holdings (NYSE: DL  ) . In other words, not well.

The television advertising specialist priced its American Depository Shares (ADS) at $6.80 apiece. A week of lackluster trading later, China Mass Media begins this week fetching 15% less than its first wave of buyers paid last week.

The news is only relatively better for those who paid to get in on the China Distance debut. Those shares are trading only 9% below the $7 IPO price.

What's going on here? China Mass Media seemed like a natural. It delivers advertising services to China Central Television, China's largest network and the biggest beneficiary of the Olympic Games taking place in Beijing right now. If China Mass Media can't get any kind of love as a "story stock" now, it's certainly not going to be any easier later.

The problem with the disappointing performance of both China Mass Media and China Distance Education Holdings is that these are the only two Chinese companies to have gone public since certification testing provider ATA (Nasdaq: ATAI  ) did so back in January.

The market's lukewarm reception -- OK, let's call it an ice-cold reception -- of the two new debutantes will keep other Chinese companies wary of going public in the United States for now.

Then again, it's not as if Americans are clamoring for homegrown new issues, either. Web-hosting giant Rackspace (NYSE: RAX  ) is also trading well below last week's IPO pricing. It's pretty hard for underwriters to unload IPOs if investors see a trend of fading debutantes.

Remember when new IPOs would pop at the open? They're popping again, but it's not the kind of popping sound that investors like to hear.  

Other ways to stamp your passport:

Longtime Fool contributor Rick Munarriz is a fan of China's growth story, but he does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 704518, ~/Articles/ArticleHandler.aspx, 10/25/2016 3:29:08 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,167.39 -55.64 -0.31%
S&P 500 2,142.66 -8.67 -0.40%
NASD 5,279.27 -30.56 -0.58%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/25/2016 2:03 PM
ATAI $3.55 Down -0.11 -3.00%
ATA CAPS Rating: No stars