Facebook killed the IPO market

A few weeks ago, the IPO market was red-hot.

Facebook (Nasdaq: FB) was about to make its record-setting debut, when it not only became the third-largest initial public offering in U.S. history but also the 11th IPO to price in the first 17 days of the month.

That brought the U.S. IPO tally to 65 new public companies in just over three-and-a-half months, good enough to make it the busiest four-month stretch since the last four months of 2010.

Since then? Utter silence. Not a single U.S. company has gone public since the well-documented disaster that was the Facebook IPO. It's been less than three weeks since the social network went public. But in the IPO market, that's a lifetime.

This is the longest IPO drought by far since January, when only four companies went public on the heels of a tumultuous year for new stocks. Prior to the second half of May, there hadn't been more than a week between IPOs since the first month of the year.

The lull is perhaps partly due to the fact that many companies rushed to get their IPOs out the door before Facebook went public, so as to ride the social network's coattails while IPOs were en vogue. Now that Facebook has tanked since going public - the stock is down a staggering 31.5% since the company's May 18 debut - IPOs are no longer "cool."

In fact, it's more than just perception. It's probable that many companies are looking at Facebook's post-IPO failure and wondering: If a company that well-known and that profitable gets crushed after going public, what chance do we stand?

And as Facebook tanks, it's dragging other recent IPOs down with it.

Of the 10 stocks that went public other than Facebook in May, six of them have already fallen below their IPO price. The average return among them is 1.9%. Compare that to the 8.7% average returns among all of this year's IPOs, and the drop-off is clear.

So with returns among new stocks dwindling and Facebook becoming more and more of a cautionary tale by the day, the IPO market could remain silent for some time. As of now, Renaissance Capital (a great source for all things IPO) lists only one stock on its upcoming IPO calendar. That's a far cry from the past four months, when the calendar was typically booked solid with dozens of companies waiting to price.

Just as Facebook may have been responsible for jumpstarting the IPO market, it now seems that the stock's very public struggles have effectively scared off all other prospective IPOs.