Facebook and Yelp are set to lead the biggest year for US initial public offerings by internet companies since 1999, testing demand for IPOs after investors lost money on Zynga and Pandora Media.
With Facebook considering the largest internet IPO on record and regulatory filings showing that at least 14 other web-related companies are planning sales, the industry may raise $11bn next year, according to data compiled by Bloomberg.
That would be the most since $18.5bn (€14.3bn) of IPOs in 1999, just before the dot-com bubble burst.
While surging sales growth may lure investors to Facebook, the biggest social-networking site, heightened stock volatility and Europe's sovereign-debt crisis could temper the pace of global IPOs after a 38pc decline in 2011.
Even internet companies may cut valuations for their offerings after Zynga, the largest developer of games for Facebook, and online-radio company Pandora slumped following share sales this year.
"Technology is still a place where you can get outperformance in terms of growth against a tepid market backdrop," said David Erickson, New York-based global co-head of equity capital markets at Barclays.
"You might see more IPOs emerge if we get resolution in Europe or stability that makes investors more comfortable with the overall market."
IPOs raised $155.8bn in 2011, compared with $252bn a year earlier, and US initial offerings generated $38.8bn, about 10pc less than in 2010, Bloomberg data shows.
In Asia, IPOs this year have raised $79.2bn, less than half the $176.5bn last year, according to Bloomberg data.
While funds raised in Europe rose for the year, they sank more than 95pc since August from a year earlier after the worsening debt crisis and a cut to the US credit rating sapped confidence in global markets.
Morgan Stanley took the biggest share of both US and global IPOs for the second year in a row after working on initial share sales by Glencore International, HCA Holdings and Michael Kors Holdings.
Pen Pendleton, a spokesman for New York-based Morgan Stanley, declined to comment on the matter.
The bank was also the lead underwriter on Zynga and Pandora's IPOs. The stocks' declines following those public debuts may prompt greater scrutiny of valuations in 2012, said James Krapfel, an analyst at Morningstar in Chicago.
"Investors will take a harder look at the numbers going forward and need to see strong revenue and profit growth," Mr Krapfel said.
Bookings, an indication of deferred revenue, at Zynga have increased more slowly this year, suggesting the company's IPO price was too high, according to a December 9 Morningstar report.
Zynga, which raised $1bn in its IPO this month, has since fallen 2.5pc after going public at a valuation three times that of rival Electronic Arts. Oakland, California-based Pandora has plunged 36pc since its June 14 IPO.
Facebook, based in Menlo Park, California, is examining a $10bn offering that would value it at more than $100bn, a person with knowledge of the matter said last month.
Total sales at Facebook in 2012 may surge 52pc to 62pc from this year's projected $4.27bn through increased ad revenue, according to Debra Aho Williamson, an analyst at EMarketer. Industrywide, the display ad market may surge 24pc to $12.3bn this year.
"Tech offerings generally offer real growth, and investors get very excited when they can't find growth in the broader market," JD Moriarty, New York-based co-head of equity capital markets for technology in the Americas at Bank of America, said at a briefing this month.
Yelp, the consumer review website operator, and email marketer ExactTarget both filed for IPOs in November. This year, 19 internet companies generated $6.6bn in US initial share sales.
Glam Media, a web-advertising company that targets women, plans to make its first IPO filing by the end of the second quarter, people familiar with the matter said on December 14.
AppNexus, the online ad company backed by Microsoft, may go public in late 2012, chief executive officer Brian O'Kelley said in September.
In Europe, the IPO market has "essentially come to a halt" as the sovereign-debt crisis spread from Greece to Portugal and Italy, said Mary Ann Deignan, an analyst at Bank of America.
In September, Siemens suspended an IPO of its Osram lighting unit and Spain pulled the initial public offering of its lottery operator as global stocks headed for a one-year low.
"There are companies that would like to go public, but are waiting for the right market environment to do so," said Ms Deignan. "As long as policymakers and politicians control the headlines, Europe remains a challenge."
RIB Software raised e145m in February, this year's biggest technology IPO in western Europe.
Yandex NV, owner of Russia's most popular internet search engine, raised $1.4bn in a US IPO in May, while VKontakte, the largest Russian social networking website, also may sell shares in New York next year, people with knowledge of the matter said in June.
"The IPO market in Europe is probably six months behind where we are in Asia and the US," Brad Miller, New York-based global co-head of equity syndicate at Deutsche Bank, said at a briefing this month.
The first pick-up of stock sale activity in Europe may come as governments sell state-owned assets to the public through spin-offs, Mr Miller said.
The performance of new internet stocks next year will show whether investors are ready to dive back into the web, said Laurent Morel of Societe Generale.
"Technology IPOs are definitely the theme there, with lots of hot names like Zynga coming to the market," said Mr Morel, the Paris-based global head of equity capital markets.
"But if you look at their performance, most of them are struggling. Next year will be the real test." (Bloomberg)