In 2020 and 2021, numerous companies sought to go public. However, in 2022 and 2023 the number of IPOs fell significantly. What’s next for the IPO market?
• IPO number fell significantly after 2021
• Return to the actual normal state
• SHEIN, Reddit, Skims and Rubrik are apparently aiming to go public
After numerous companies sought to go public in 2020 and 2021, the number of IPOs has since declined. Now the Chinese online fashion retailer SHEIN apparently wants to go to Wall Street. As the Reuters news agency reported, the company recently filed for an IPO in the United States. It could be one of the biggest stock market debuts of 2024. According to CNN Business, there are also reports of other possible upcoming IPOs. The community network Reddit, the US shapewear and clothing brand Skims and the Microsoft-backed cloud data management and data security company Rubrik are also planning their IPO.
Market pays attention to profitability, margins etc.
Angela Lee, a venture capital professor at Columbia Business School and founder of startup investment network 37 Angels, said in an interview with CNN Business that the apparently impending IPOs of Skims, SHEIN and Reddit should be viewed separately. SHEIN is the typical company that grows at all costs and will win customers very quickly. However, the company will care less about long-term financial sustainability or the climate and environment. However, it has recently become apparent that the market is paying attention to and preferring profitability, good unit economics and margins. According to Lee, the IPO is just a milestone – then the companies have to prove themselves, and the public markets will not easily forgive companies that grow at any price. If a company like SHEIN goes public, she doesn’t think it will necessarily make people feel better.
The number of IPOs is likely to normalize
Despite the upcoming IPOs, Lee does not believe in an IPO renaissance on Wall Street, as she revealed in the interview with CNN Business. She expects the IPO market to be closer to a few hundred IPOs in 2024, but a distinction must be made between the number of IPOs and the valuation metrics. According to Lee, the number of IPOs should return to normal in 2024. However, she does not believe that they will reach the valuation metrics from 2019 to 2021.
However, Lee also noted that the situation is currently not that bad compared to 2020 and 2021, but that developments in 2020 and 2021 were crazy and there is now a return to normal. According to Lee, historically about 200 companies have gone public each year. There have been around 150 IPOs so far in 2023, which is actually slightly below the historical value. However, the development only appears catastrophic given the fact that there were 480 IPOs in 2020 and 1,035 in 2021. Therefore, in their opinion, these years should not be used as a comparison.
Good time for corporate buyers
Asked whether Lee believes the coming year will be a turning point for the M&A market, which also did poorly in 2022, she told CNN Business that it depends on which side you are on. In her opinion, this is currently a good time for corporate buyers. There are numerous companies with good business models, good customer growth and good profitability. However, things are not looking so rosy for sellers at the moment, as it is a buyer’s market and companies are trading at much lower prices than just a few years ago.
Editorial team finanzen.net
Selected leverage products on Microsoft
With knock-outs, speculative investors can participate disproportionately in price movements. Simply select the lever you want and we will show you suitable open-end products on Microsoft
The leverage must be between 2 and 20
Advertising