The IPO market has been hot recently, with the number of new companies going public on pace to produce their highest yearly total since 2007. But that's not the only way the current landscape resembles the go-go late '90s, when all those dotcoms launched one high-flying IPO after another. According to a new study, the majority of tech IPOs this year have been by companies that are losing money.
Of the 28 tech IPOs that have taken place so far in 2013, 19 of them, or 68 percent, have been companies that reported a loss over the previous 12 months. The most prominent one, Twitter, promises to keep up this trend: It lost $79 million in 2012. In 1999 and 2000, a stunning 86 percent of tech IPOs were from money-losing companies.
Many of these companies will eventually turn it around, of course, but research shows that it's a significant headwind. From 1990 to 2011, money-losing tech companies that went public returned 21.5 percent in their first three years, but those that were already profitable before going public returned 55.2 percent.
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