The year 2021 has been a record-breaking year for initial public offerings (IPO). A total of 976 IPOs were listed from the start of the year through Dec. 2, 2021. That’s 496 IPOs, or 103.3%, more than the total number of IPOs through all of 2020, which had…
broken the previous record set in 2000.
The number of public companies waned during the two-decade period between 2000 and 2020 amid a boom in mergers and acquisitions (M&A). The recent rise in IPOs has been driven largely by ultra-low interest rates and a flood of cash from government stimulus during the COVID-19 pandemic. That has helped send market valuations to record highs and has increased the attractiveness for private companies to go public. Other factors contributing to the IPO boom are startups desperate for cash and the rising popularity of special purpose acquisition companies (SPACs). SPACs are a special type of company whose sole purpose is to merge with or acquire companies to take public.
Check out the top five IPOs, or direct listings, by their returns. We measured each by its performance since the shares were first listed this year through Dec. 2, 2021. Stocks with a market cap less than $1 billion were excluded from the list.
Digital World Acquisition is a SPAC, also known as a “blank check company,” which was formed on Dec. 11, 2020 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses. On Oct. 20, 2021, the company entered into a merger agreement with its wholly-owned subsidiary DWAC Merger Sub Inc., former U.S. President Donald Trump’s Trump Media & Technology Group Corp. (TMTG), ARC Global Investments II LLC, and TMTG’s chief legal officer. Upon completion of the merger, shareholders of DWAC will become shareholders of TMTG, the newly formed public company. Trump, who is chairman of TMTG, plans to use the company to build a media and technology company focused on social media, digital streaming, and more.
The planned merger is the focus of newly opened investigations by the Securities and Exchange Commission and the Financial Industry Regulatory Authority. The probes were disclosed on Dec. 6, 2021 in a regulatory filing by DWAC. The two regulators are looking for information regarding the trading of Digital World shares, and the SEC is also looking at documents and communications between Digital World and Trump Media, according to The New York Times. More specifically, a number of media outlets have reported that Trump and Digital World’s Chief Executive Officer (CEO) Patrick Orlando met earlier this year before the SPAC had raised any money. If the discussions between Trump and Orlando, which were not disclosed in DWAC’s prospectus, are found to be material, representing significant talks about a merger deal before money was raised by the SPAC, the discussions could be in violation of SEC rules.
On Dec. 6, 2021, TMTG announced that U.S. House Representative Devin Nunes of California would be resigning from Congress at the end of the year in order to join TMTG as its CEO beginning in January 2022.
ZIM Integrated Shipping Services is an Israel-based container shipping company that operates across the world’s major trade routes. The asset-light shipping company provides seaborne transportation and logistics services. As part of its strategy, for example, ZIM operates 88 vessels, but it owns only one. ZIM went public during a challenging time for the global shipping industry as a spike in demand for goods relative to services during the COVID-19 pandemic caught the industry off guard. Resulting logjams at ports have
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