Did Morgan Stanley get it right this time?
Morgan Stanley (MS) certainly made investors happy Friday, a day after it priced cloud computing company ServiceNow's initial public offering at $18 a share.
It looked like a bold move last night (the estimated range was $15 to $17), but early Friday ServiceNow (NOW) debuted at $23.75, more than 30% above its IPO price. And its shares are still trading around $23.
None of us will forget what happened the last time Morgan Stanley priced an IPO above its estimated range (can anyone say Facebook?). That much-hyped stock was barely able to close its first trading day above its $38 IPO price and it's now trading well below, at around $31.
ServiceNow is part of the first batch of companies to test the IPO waters since Facebook's debut on May 18. It's also the company investors were clamoring for most this week.
Cloud computing companies don't have the brand name and buzz of a Groupon (GRPN), Facebook, or Zynga (ZNGA), but this technology niche has served investors well in the past year. Two recent cloud computing firms - Demandware (DWRE) and Guidewire (GWRE) -- are up 55% and 107% since their IPOs.
Compare the ride of these stocks to the much-hyped debuts of Facebook, Groupon and Zynga. Facebook's 18% drop since its IPO looks better than its rivals. Groupon and Zynga are down 51% and 46%, respectively, since their IPOs.
The IPO window looks like it's back open for now. All four companies that priced this week, including EQT Midstream Partners (EQM), Exa (EXA), and Tesaro (TSRO), are on track to close out the week with gains.
Next week will be quiet because of the July 4th holiday, but many investors are now expecting a busy summer for IPOs.
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