MARKET SNAPSHOT: Rosetta Stone Is Year's Best Performing IPO So Far

By Kate Gibson

The much-touted stock-market debut of Rosetta Stone Inc. is living up to its billing, with the language-software maker's initial public offering the first to price above its expected range in nearly a year and its shares on Thursday rising more than 40%

"Rosetta Stone is the first successful IPO we've seen in awhile," said Peter Bookvar, equity strategist at Miller Tabak & Co., who chalked up its performance, along with a slew of quarterly results, for helping fuel optimism on Wall Street on Thursday.

Stocks had wavered between gains and losses on Thursday, before picking up steam towards the close, with consumer discretionary shares leading the gains.

"If the companies that reported earnings are taking off like this, that it is encouraging people that earnings season will be okay," said Bookvar, who pointed to Harley-Davidson Inc. (HOG), Sherwin-Williams Co. (SHW) and Illinois Tool Works Inc.(ITW) as among the shares pulling higher after reporting quarterly results.

The Dow Jones Industrial Average (DJI) was up 95.81 points, or 1.2%, at 8,125.43. The S&P 500 Index (SPX) gained 13.24 points, or 1.6%, to 865.30, while the technology-laden Nasdaq Composite (RIXF) added 43.64 points, or 2.7%, to stand at 1,670.44.

In the second public offering this week and fourth for the year, Rosetta Stone (RST) on Wednesday priced its IPO at $18, with the sale of 6.25 million shares raising $112.5 million. It was the first IPO to price above its range since valve company Colfax Corp. (CFX) went public last May.

"Rosetta could end up being the best-performing U.S. IPO since fertilizer company Intrepid Potash Inc. (IPI) rose 58% on its debut in April 2008," said Scott Sweet, senior managing partner at IPO Boutique.

Shares Rosetta Stone finished at $25.12, up $7.12, or nearly 40%, after hitting an intraday higher of $26.27.

Of course given the dearth of IPOs in recent months, the competition is limited. "After the first quarter of last year the IPO market went into a virtual dormant state. This is amongst the slowest periods in decades," said Sweet.

Bridgepoint Education Inc. (BPI) drew a colder reception from investors, with the San Diego-based educational services provider's offering of 13.5 million shares on Tuesday priced at $10.50 a share, well under the expected range of $14 to $16.

Bridgepoint's closed at $11.90, up 80 cents, or 7.2%, on Wednesday, its first day of trade.

And Bridgepoint rival Grand Canyon Education Inc. (LOPE) also priced substantially under its initial filing range and fell 1% when its shares debuted in November.

On Thursday, shares of Bridgepoint gained 1% to $12.05, while Grand Canyon Education climbed 6.5% to $15.68.