The IPO boom has room to work. What investors need to know.

Text size

Chobani, the yogurt maker, is expected to go public early next year.

Eugene Gologursky / Getty Images for Chobani

The new stock market exploded in 2021. More initial public offerings raised more money than ever before, or at least since Dealogic started keeping records in 1995.

“It was a scramble,” says Max Wolff, managing partner of Leste Clearway Capital, which provides venture debt financing for start-ups. “Companies have gone public this year when no one thought they would ever go public.”

Yet it was a boom that also fizzled out. Only 41.1% of new U.S. stocks are trading above their Dec. 7 offer price, according to Renaissance Capital.

All of this means that while the IPO market is likely to be just as busy next year, large institutional investors are becoming more cautious of high-growth start-ups and may be more picky about the market. where they put their money. This could translate into better deals on new public companies for retail investors in 2022.

Among the companies slated to go public next year include Chobani, the yogurt maker (possibly as early as January, according to people familiar with the offer); Chime, a digital bank; Instacart, the newcomer to grocery delivery; Houzz, a home improvement platform; Reddit, the social media platform that hosts WallStreetBets and other forums; Databricks, an AI software start-up; and the Discord chat service.

The biggest on the horizon is Stripe, the payment processor, which is slated to go public next year. Valued at $ 95 billion in its last fundraiser, Stripe is believed to be the largest US company to go public since


Facebook

in 2012. It would be bigger than this year’s giant,


Rivien Automobile

(ticker: RIVN), which went public with a market value of $ 66.5 billion; its shares are up about 50% for the year.

Company / Teletypewriter Dec 10 Price IPO date % change from IPO price
Affirm Holdings / AFRM $ 114.68 January 12 134.0%
Kanzhun / BZ 39.18 June 11 106.2
Ryan Specialty Group Holdings / RYAN 38.44 11 July 63.6
Rivian Automobile / RIVN 114.66 November 9 47.0
SentinelOne / S 50.30 June 30th 43.7
Company / Teletypewriter Dec 10 Price IPO date % change from IPO price
Oscar Health / OSCR $ 10.89 March 2 -72.1%
RLX / RLX technology 4.22 January the 21st -64.8
DiDi Global / DIDI 6.49 June 29 -53.6
Oatly / OTLY Group 8.50 May 19 -50.0
Robinhood / HOOD Markets 20.13 July 28 -47.0

One thing not to look forward to in 2022: Chinese tech IPOs, which made some of the most exciting debuts of 2021.


UTime

(UTME) jumped 875% in April, while


Cloopen Holding Group

(RAAS) rose 200% in February. But pressure from regulators in Washington and Beijing and the planned delisting of shares of


DiDi Global

(DIDI) of the New York Stock Exchange, just months after its June debut, means Chinese tech companies are more likely to list in Hong Kong or Shanghai than in the United States. Still, many bankers say they don’t expect their absence to have a significant impact on the U.S. IPO market.

As of Dec. 7, 954 companies have listed their shares in the United States this year, raising $ 301 billion, according to Dealogic. That’s more than double the 399 companies that raised $ 146 billion in the same period a year earlier. This year’s pace has surpassed the IPO high point set at the dawn of the dot-com boom in 1996, when 848 companies in 1996 raised $ 79 billion. Yet there are differences.

“The go-go internet era of the late 90s had a lot more IPOs under $ 100 million, and today we have a lot more IPOs above $ 1. billion USD, ”said Andrew Wetenhall, co-head of equity capital markets for the Americas at Morgan Stanley.

And 60% of this year’s IPOs were from ad hoc acquisition companies, or SPACs. That means there have been just 383 traditional IPOs, valued at $ 148 billion, still a record.

The IPOs started the year on a high note.

“We were coming out of a very dark winter and the tide was turning with the vaccine launch starting to happen,” said Eddie Molloy, co-head of capital markets for the Americas at Morgan Stanley. “The PSPC market was on fire and the retail business was buying with enthusiasm. ”

Much of that euphoria evaporated as some big names fell apart. Actions of


Soft green

(SG), the restaurant chain known for its salads, has fallen 40% since its first listing in November, while those of


All birds

(BIRD), the beloved Silicon Valley shoe maker, is down 47% since its debut this month.

Of the 27 companies that raised more than $ 1 billion and went public this year, 15 are now trading below their IPO prices, according to Dealogic. the


Renaissance IPO

The Exchange Traded Fund (IPO), which tracks companies for three years after their IPO, is down 26% from its February high.

“IPO returns as an asset class are significantly lower than last year or the first quarter,” said Daniel Burton-Morgan, head of the US Equity Markets Union at Bank of America.

This can present an opportunity for retail investors who are doing their homework and can take risks.

“The market is much more risk averse,” says Mark Hawtin, chief investment officer at GAM Investments, a European-based asset manager that invests in IPOs. “Businesses that won’t be profitable for a while will be downsized. Retail investors may be able to buy shares of recently opened companies “much cheaper than they were able to buy in the recent past,” he says. b

Write to Luisa Beltran at [email protected]


Source link

Comments are closed.