shares experienced a sophomore slump on Monday, falling more than 7% after an inaugural-day trading jump.
Much touted for the days and weeks leading up to its eventual public debut, Blackstone saw its shares give back more than half of their Friday gains to $32.44. The IPO priced late Thursday at $31.
"The circus left town," quips John Fitzgibbons, former investment banker and IPO analyst at IPOScoop.com, commenting on Tuesday's deflation.
Fitzgibbons says a number of factors could be factoring in the letdown in Blackstone shares, including institutional portfolio managers, who received large allocations, readjusting their portfolio to preferred levels.
He also noted that investors could be digesting all the tax news swirling around Capitol Hill, which has threatened to levy steeper tax rates on alternative investment shops.
Congress has issued a series of bills to tax alternative investment shops more heavily. The Senate Finance Committee is considering a bill that would increase the tax rate for those entities, and last Thursday U.S. Reps. Henry Waxman (D., Calif.) and Dennis Kucinich (D., Ohio) issued a letter to
Securities and Exchange Commission
Chairman Christopher Cox in an attempt to try to delay the Blackstone IPO.
All the grandstanding did little to stop Blackstone from hitting the market, but the much-lauded stock could not escape the preponderance of bad news and fears that the credit market might be swooning due to a pair of failing
"The sizzle is over, and now we have to take a look at the steak," Fitzgibbons says.
Blackstone's public offering saw the private-equity firm and its underwriters unloading more than $4.1 billion from its sale of so-called partnership units. It added billions to the net worth of co-founders CEO Stephen Schwarzman and Pete Peterson.
Paul Bard, an analyst at Renaissance Capital in Greenwich, Conn., which tracks IPO activity, says that investors are struggling to try and value companies such as Blackstone -- not only in light of what is still expected to be sparse disclosure of the inner workings of the institutions, but also what impact taxes may have on overall performance.
"At this point, there are a lot of headlines that might drive stock down in the near term," Bard comments. "It had an initial pop on the first day, and now it's starting to pull back and get a little bit more pressure," he adds.
Given all the uncertainty, Bard warns that investing in private-equity firms could prove a risky proposition for mom and pops. "There's a lot of overhang tied to the tax situation," he says.
That said, he expects investing in a Blackstone to revolve around ultimate trading objectives. "It really depends on what the investors' long-term objectives are and their time horizon," Bard states. "I don't know that I'd look too much into
Blackstone's downtick, at this point," he adds.