- Just 34 IPOs priced in January, compared to 118 for the same month a year earlier.
- Tech names like WeTransfer and Justworks postponed potential IPOs due to market volatility.
- Bankers are predicting others, like Reddit, Rue Gilt and Turo, could also delay their listings.
Choppy equity markets have pumped the brakes on an IPO sprint, leaving bankers scratching their heads on when the next pipeline of tech darlings can pepper the stock markets.
Luxury e-commerce retailer Rue Gilt, and car-sharing service Turo, could delay potential February IPOs to March, or beyond the first quarter, two people in equity-capital-markets teams at Wall Street banks told Insider. Reddit’s highly-anticipated IPO, which touted a potential $15 billion valuation last month, may also struggle to garner enough investor interest to justify going public in the next two months, the bankers said.
A spokesperson for Rue Gilt declined to comment, while a spokesperson for Turo declined to provide any updates on the timing of its potential IPO. Reddit did not respond to a request for comment.
Investors have soured on stocks due to the specter of increased interest rates, as central banks look to tackle soaring inflation. Tech companies — a great beneficiary of booming equity markets last year — have seen their valuations slashed as investors move their money into safer bets like energy stocks or Treasury bonds.
The tech-heavy Nasdaq Composite was down more than 15% last month, leading potential newcomers like file-sharing company WeTransfer and HR software unit Justworks to postpone their potential listings. Only 34 IPOs priced in January, compared to 118 a year earlier, data from Dealogic showed.
Last year, the S&P 500, Dow, and Nasdaq Composite indexes gained 27%, 19%, and 21%, respectively. IPO issuance soared, as global stock offerings rose 64% compared to 2020, according to data from EY. This year, even though some 500 companies have filed prospectuses for potential 2022 listings, bankers warned that marketing these IPOs to a cautious investor base will be a tall order amid fluctuating stock indexes.
“Deals get done on a relative-value basis, so if a company’s best comp is trading down, then it’s best to wait,” one of the two people said. “Smart companies and their advisors will not take a ‘pencils down’ approach. They’ll manage expectations and wait for a better window to launch IPOs.”
The see-saw nature of equity markets was on full display this week as indexes showed signs of recovery before plummeting again.
US stocks rose for the fourth consecutive day on Wednesday after strong earnings from Google parent Alphabet lifted the battered tech sector. But then shares of Facebook parent company Meta had sunk more than 25% by Thursday afternoon — wiping out over $200 billion from its
Read More: Bankers’ IPO Predictions on Reddit and Others As Tech Stocks Plummet