IPOs Return
As ideas continue to circulate and markets are seemingly created in days, the number of new public companies in the past few decades has been historically astounding. Alongside breakthroughs in Tech and the everlasting success of financial markets, the number of new public companies in the form of IPOs, otherwise known as initial public offering, reached an unprecedented record in 2020 of 480. Just a year later, that record was more than doubled to 1,033, more than half of all IPOs enacted during the 1980s. This exponential boom was, however, short-lived, as a dry spell in 2022 left total IPOs at 181. But why? The ultimate basis for a company going public is to increase opportunities for funding and raising capital. In the past few years, the increased popularity of private markets has eliminated several contenders from joining the exchanges, as they can receive all the funding, they need without all the associated risk from Wall Street. High costs and legal headaches involved with the IPO process also acted as major deterrents last year, but advocations from exchanges like NYSE and Nasdaq were able to convince the SEC to loosen control last December.
Luckily for technology investors, it seems the latter half of 2023 may hold an uptick in the volume of venture-backed Tech IPOs. This past week, grocery delivery company Instacart, chip designer Arm, and marketing automation startup Klaviyo all made SEC filings to go public, hopefully promulgating a long-standing revival in the space. With a robust economy and better-than-expected earnings figures, it is no surprise that private companies may follow suit, especially with the laxer IPO regulations. Now, some unconfirmed but highly anticipated names that may enter the exchanges are SpaceX, Stripe, Discord, Reddit, and more.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
