As the first quarter of 2022 winds down, the IPO parade is ending with a whimper — there were no initial public offerings this week and just one last week. After a banner 2021 for initial public offerings, the pace of new Wall Street arrivals has slowed considerably in an…
environment marred by market volatility, geopolitical turbulence and tightening monetary policy.
“The US IPO market remains on life support,” said Bill Smith, chief executive of Renaissance Capital.
There have been just 18 IPOs in all this year, raising a median amount of only $27 million, the weakest market for new floatations in more than 20 years.
Chief among the factors for the stagnation has been unease generated by the war in Ukraine.
“Whenever there are international tensions you see a big drag on Wall Street offerings,” said Franck Sebag, a partner at EY in France.
“It’s very difficult to think about going public when the market is so volatile,” said Gregori Volokhine, of Meeschaert Financial Services.
One sign of the churn: the tech-focused Nasdaq has already seen in 2022 eight of its 20 biggest-ever single-session losses.
“Everyone gets more cautious, including the companies who are considering IPOs and investors who normally gravitate to such ventures,” Volokhine said.
“Imagine if you go public on a day when there is really bad news in Ukraine,” Volokhine said. “Nobody wants to take that chance,” he said, adding that companies would rather hold off than risk a bad market debut that stains the company’s standing with investors.
– Higher interest rates – The decline also reflects disappointment at how the most recent new market entrants have fared, according to Kennedy of Renaissance Capital.
The 2021 IPO market was the richest in history, with 2,682 companies raising $608 billion, according to PricewaterhouseCoopers.
But several of the most eagerly awaited companies have tanked, including electric vehicle maker Rivian, which has lost more than 70 percent of its valuation since its peak.
Others to see dramatic tumbles include trading platform Robinhood, down 84 percent since July, and entertainment company Roblox, down…
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