Last year saw 2,388 companies globally launch an initial public offering (IPO) in what was a truly remarkable year for market debuts. This represents a 64% increase from the previous year, which itself set historic records.
However, the tide seems to be slowly turning against these rampant market newcomers.
Too much of a good thing…
Considering the record-setting number of IPOs last year, it would be easy to assume that it must be a lucrative act. However, over half of the companies floated in the United States last year were trading below their initial offer price by the end of the year. Some major success stories, such as Rivian’s blockbuster debut, seem to have overshadowed the falterings of many IPOs.
Now, these issues are very much coming to light. In the last number of weeks, we have seen some notable planned IPOs postponed in light of current market conditions. Business software provider Justworks made an eleventh-hour call to delay its public debut, and just yesterday we saw file sharing service WeTransfer cite a volatile market in its own cancellation announcement.
Inflation fears and widespread market volatility seem to be sounding the death knell for IPOs in 2022, despite the year not even being a month old. With companies such as Reddit and Stripe considering IPOs this year — much to the excitement of many investors — will their appetite wane as the IPO pipeline dries up?
If January sets the tone for the rest of the year, we could be looking at quite a muted IPO landscape in comparison to the noise of 2020 and 2021. While this could certainly pave the way for only truly valuable companies to attempt to debut, it could also scare away some of Wall Streets’ most coveted private firms.
All we can do now is wait.
Financial Writer at MyWallSt
Pádraig’s favorite stock is Nike. Growing up as a sports fanatic, seeing Nike collaborate with athletes like Jordan, Lebron, and Ronaldo inspired him and cemented the brand in his mind. Now, despite having failed miserably in his attempts to earn a fabled Nike sponsorship, he still believes in the innovation and creativity behind Nike and is convinced they will only grow stronger as the world's leading sports brand.