Illustration: Sarah Grillo/Axios

The IPO market has boomed during the pandemic era, both for real companies and shell companies, reflecting the broader decoupling of the equity economy and real economy.

Reality check: Things could soon change. And fast.

What's happening: Here's the basic flowchart...

  1. Investors have been giving issuers mulligans for recent financial performance. If the first half was strong, great. If it was weak, that's okay too because, you know, COVID. Everyone into the pool.
  2. That added IPO lubricant was based on assumptions that Q2 earnings would be across-the-board awful. But they haven't been, particularly when it comes to technology.
  3. IPO investors now may need to recalibrate. Maybe only those with demonstrated strength deserve to go public. If performance has been weak, it may be more about the issuer than about the virus.

Caveat: I am presuming some semblance of market rationality, without much basis for doing so.

The bottom line: The IPO window opens and shuts without much warning, and it's never a good idea to let your fingers rest on the sill.

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