By CultureBanx Team
- Demand for IPOs is down 45% globally for companies
- The IPO market is having its slowest year in more than a decade, with just $7.2 billion raised in traditional new stock offerings in the U.S.
Wall Street seems to have pumped the brakes on Initial Public Offerings (IPO) as the markets continue their roller coaster run. Globally, IPO activity between September and November 2022 plunged 45% compared to a year ago. Herein lies the problem, fund managers tend to shy away from new issues, if recent ones they have bought are performing badly. This could keep IPO activity in the doldrums for the remainder of the year.
Why This Matters: IPOs from 2021 are today largely in the red also dampened investor confidence. The IPO market is having its slowest year in more than a decade, with just $7.2 billion raised in traditional new stock offerings in the U.S. Some of the publicly traded companies that have dug themselves into a deep hole post IPO include Rent the Runway, Robin Hood, Oscar Health and Toast. The companies are down anywhere between 50% – 85% from their initial public offering price.
A huge share of POs were SPACs in 2021. The majority of IPOs were trading above their offer prices, but by the end of last year, two-thirds traded below. In the three quarters ended Sept. 30, 2022, 76 SPAC IPOs on U.S. exchanges made $12.41 billion, down from the 450 listings that raised $124.07 billion over the same period in 2021.
Situational Awareness: There are plenty of companies waiting for their chance to shine on a big stock exchange. The biggest desire for these companies is stability both in the financial markets and in the broader economy. However, falling stock prices are contributing to significantly lower valuations, which damp the allure of a public debut. Experts suspect the IPO market won’t recover until the second half of 2023, if at all.
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