“I would say the IPO market will recover in late 2024,” Torres says. When Will the IPO Market Return to Normal?įor now, institutional investors-who would buy blocks of stock in any IPO-remain reticent about plunging cash into IPOs at the prices IPO stock executives are demanding. Between 19, over 60% of newly public companies saw negative returns after five years.
Still, the struggles of IPOs in 20 should not surprise savvy investors who understood the bigger picture. “I don’t expect IPOs to rebound while interest rates remain high, amid quantitative tightening and uncertainty about the trajectory of interest rates,” says Jose Torres, senior economist at InteractiveBrokers. The firehose of IPOs dried up along with the easy money that fueled new offerings as the Federal Reserve began its campaign of interest rate hikes to beat down historically high levels of inflation. Unfortunately, the good times did not last. That optimism was turbocharged by retail investors piling into meme stocks and economists’ predictions that the good times would last as governments eased Covid-19 restrictions and shoppers returned to brick-and-mortar stores. Remember IPOs? A cavalcade of companies went public during the peak of the Covid-19 pandemic in 20 as the stock market soared, driven higher by the proliferation of cheap money and retail investors stuck at home with cash burning a hole in their bank accounts.īig names, from Airbnb and Coinbase, to Palantir and Rivian rode a wave of animal spirits to impressive IPO debuts.
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