The IPO Newcomers
After a dry spell of big-name IPOs released onto exchanges, the previous two months have birthed three stars onto Wall Street. Instacart, Arm, and Birkenstock had undergone their initial public offerings in around the past month, but unfortunately, they have not gone as smoothly as they would’ve preferred. Beginning on September 14th, popular chip designer Arm Holdings went public at around $64 a share. Now, these same shares sit at just under $52, or down 18.38% since its inception. Both high interest rates and increased volumes of short selling led to Arm’s slump, with companies’ valuations being corrupted by the current macro environment. Next up on the chopping block was grocery delivery service Instacart, which debuted exactly one month ago at around $34 per share. The firm is down 24.60%, compared to the S&P’s return of negative 2.91% during the same period.
Last week, popular German footwear brand Birkenstock made its Wall Street debut at $46 a share. The sandal maker has already lost over 16% of its stock value in just six trading sessions; its first-day performance marked one of the worst of any IPO to raise $1 billion in the past decade, placing 90th out of 95 companies based on first-day returns. Unfortunately, poor market conditions, high valuations, and tough public perception have led to rough situations for the past hundreds of IPOs. In the past four years, the 10 largest U.S. IPOs are down an average of 47% from their first-day closing price. With the Initial Public Offerings stuck in a draught for lasting around 18 months, investors across the globe hope more big names take their shots on public markets to attempt to revive the dying IPO pipeline.
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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.