Newmark’s IPO bombed. Here’s why

Blame bad timing and accounting measures

New York /
Jan.January 10, 2018 10:30 AM

Howard Lutnick and Barry Gosin

Newmark Knight Frank’s blockbuster IPO in December is shaping up to be a disappointment. Blame bad timing and confusion over the company’s earnings.

Newmark, which was owned by Howard Lutnick’s BGC Partners, initially planned to sell 30 million shares for $19 to $22. Instead it sold 20 million for $14 each in its Dec. 15 IPO on the Nasdaq stock exchange. As of Tuesday, the share price had risen slightly, to $15.47.

“It didn’t price as well as we thought,” Newmark’s CEO Barry Gosin told the Wall Street Journal. “We reduced it.”

Observers were puzzled ty the decision to go public in mid-December, traditionally a bad time for IPOs, the Journal reported. But Lutnick had made a commitment to go public in 2017, putting him under pressure. “Generally we like to do what we say we’re going to do,” Gosin said. Going public in 2017 also meant laxer disclosure requirements, because the firm’s revenues were still low enough to qualify as a so-called emerging growth company.

Investors also had a hard time comparing Newmark’s earnings to other real estate firms like CBRE or JLL because its offering prospectus didn’t use the standard GAAP measure.

BGC bought Newmark for $99 million in cash and shares in 2011. The Real Deal broke down the potential implications of Newmark’s IPO for the industry in November. [WSJ]Konrad Putzier


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