The IPO Market: It’s Quiet Out There
Traders on the New York Stock Exchange have been experiencing a surprising lack of activity in the weeks leading up to Thanksgiving. Typically, it’s a time when large initial public offerings (IPOs) eager to go public before the holiday season starts flood the market. However, Don Short, head of venture equity at InvestX, reports that nothing is happening. According to Matt Kennedy from Renaissance Capital, the recent poor performance of stocks, higher interest rates, and underwhelming after-market performances from recent IPOs have led many IPO candidates to reconsider or delay their debuts.
For instance, Waystar, who was considering launching its roadshow last week, is reportedly delaying its IPO until December or even 2024. Klarna, another company interested in an IPO, is not planning to go public anytime soon. This is alarming given that this period is usually when big IPOs go public. However, 2022 and 2023 have seen a different trend, with a mere 96 IPOs raising $18.8 billion this year, after 2022 saw a dismal $7.7 billion raised. In comparison, a normal year’s amount would be at least $50 billion.
Another contributing factor is the recent underwhelming performance of some IPOs, such as marketing automation company Klaviyo and restaurant chain Cava Group. This has led to a lack of capital in financing markets, making it difficult for companies to stay afloat. Yet, despite the bearish IPO market, Kennedy remains optimistic, believing that December may still see a surge in activity if the latest rally persists.
Perhaps the biggest challenge faced IPO candidates is the tough decisions they need to make. Many are left with the options of going public with substantial haircuts, staying private with a funding crunch, or merging or going out of business. If the trend continues, it could lead to the demise of many unicorns, especially those in the tech sector. With this looming over the market, IPO candidates will need to navigate the challenging environment to secure their future.