Blackstone Falls Below its Offering Price

This is bad news for KKR, Apollo, and all the other private-equity firms looking to go public. Blackstone's stock is now trading below $31, back where it started – which means that people who got in at the IPO price are beginning to lose money, and anybody who bought in the secondary market is seriously underwater. Yesterday, Under the Counter said that "the $31 level is a line in the sand that this suddenly jittery tape does not need to test," and although I'm generally dismissive of lines, be they on charts or in the sand, I have a feeling he's right.

Over the course of just two trading days, Blackstone has lost all of its froth. Frankly, it was probably priced too high to begin with, considering the tax bills in the Senate and the uncertain future for leveraged buy-outs more generally in a world where interest rates are rising rather than falling. But that won't be any consolation to the underwriters working on KKR's IPO. For even if KKR tries to go public at a lower multiple than Blackstone (and remember, there are egos at work here, and it's far from certain that they would do that), the financial price loves to concentrate on price movements much more than valuations. And if people think that private-equity stocks only go down, there'll be precious little demand for KKR's or anybody else's.