NEW YORK (TheStreet -- Many IPOs win over investors by promising growth. It's an easy promise. We all want to do well, right?
Sure, a company wants to open 100 stores. Of course, a manufacturer wants to sell millions of widgets. If that doesn't happen according to plan, that's alright because the disclosure language in IPO filings always includes a risks section that basically states everything can go wrong.
Many times new IPOs have private equity companies, who are just looking for a profitable exit, promoting all the positives while brushing off any criticism.Here are the worst offenders of IPO companies that have promised much and delivered little:
Dunkin' BrandsThe pink stores selling sugary sweets definitely sold investors an empty calorie stock. It was clear in the S-1 filing that Dunkin' Brands (DNKN), the parent company of Dunkin' Donuts and Baskin Robbins, was loaded with debt and asking a lot from its franchisees. But investors familiar with the product seemed to look beyond the red flags and wanted in on the deal. Even the well known travails of Krispy Kreme (KKD) weren't even enough to deter buyers. So far, the stock has performed well, rising more than 40% since making its debut. But almost immediately after the public bought stock, the company announced that net income and profits fell. It also said that the stores will begin raising prices to offset high food costs. The company did pay down some debt, but is still has liabilities totaling $1.5 billion. The stock ran as high as $31.94, but finished Thursday at $25.52, losing 4% in the broad market's downdraft.
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