May 29, 2024 - Business

The IPO shortage is about feels, not facts

Illustration of a bull wearing a nose ring with a broken heart.

Illustration: Shoshana Gordon/Axios

The IPO window is open, even if precious few companies are willing to hurl themselves through it.

Why it matters: At some point that window will close, perhaps suddenly due to an external shock, and there will be rampant remorse.

The big picture: U.S. stock markets are being positively distorted by the Magnificent Seven, but that shouldn't detract from IPO successes.

  • Renaissance Capital's IPO ETF is outpacing the S&P 500 for the past year.
  • Four of the past five companies to raise $100 million+ IPOs sold more shares than originally expected, and did so at or above the tops of their ranges.
  • Four of those companies also are trading above their IPO prices. So are most of the high-profile offerings we've discussed in this newsletter, including Reddit, Rubrik, Ibotta, Centuri, UL Solutions, PACS Group, and Astera Labs.
  • Go back into last fall, and you'll see that Arm, Birkenstock, Cava, and Instacart also are all trading above their IPO prices. Klaviyo is underwater, after pricing strong, but that's the exception to a pretty compelling rule.

By the numbers: Fifty-eight companies have raised $14.1 billion in U.S. IPOs this year.

  • That's a big jump over last year but still quite low by recent historical standards, and even lower when considering the massive pipeline of venture-backed "unicorns."

The bottom line: If your company isn't going public because you're "waiting for IPO conditions to improve," at least admit to yourself (and your investors) that it's more about feels than facts.

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