Alibaba (BABA) was a strong IPO out of the gate, but it has faltered significantly since peaking late last year, and it’s dragging down the Bloomberg IPO index that it has a massive weighting in. The Bloomberg IPO index is a cap-weighted index made up of companies that have IPOd over the last year. Because of its massive size compared to most IPOs, Alibaba (BABA) has a ridiculously high 44% weighting in the index!
BABA’s size was great for the Bloomberg IPO index when the stock was going up, but its 30% decline from $120 to $84 over the last few months has caused the index to break down and lose out on a significant amount of outperformance versus the S&P 500 over the last two years.
Below is a chart showing the performance of the Bloomberg IPO index versus the S&P 500 since the start of 2013. The second chart is simply the spread between the two indexes in the first chart. You can clearly see the performance erosion that the IPO index has experienced lately.
While BABA has fallen 20% year-to-date, it’s not the only IPO that has struggled. There are plenty of other recent IPOs that are down significantly in 2015. Below is a list of the Bloomberg IPO members that are down more than 10% on the year. Some of the more notable names include GoPro (GPRO) — down 37% YTD, Virgin America (VA), TrueCar (TRUE) and Juno Therapeutics (JUNO).
Looking for IPOs that are trending higher? Sign up for a 5-day free trial to Bespoke Premium. Tomorrow we’ll be publishing a list of the IPOs that we think look the most attractive at the moment.