USA: The weakest year since 1990 - IPO market acquired "only" $7bn
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Debuts for a cure, IPO quotes down. This is what 2022 looked like on the US stock market, and all because of the Fed 's hawkish policy. There hasn't been a year as weak as 2022 on the IPO market in the US since... 1990! Only 37 companies conducted IPOs, raising only USD 7 billion.
A very weak year on the US IPO market
Only 37 companies conducted an initial public offering (IPO) on Wall Street in 2022, raising a total of $7 billion from the market. This is the lowest amount raised annually in the US as part of an IPO since 1990, when debutants raised USD 4.3 billion - points out prof. Jay Ritter from the University of Florida. The data provided by Ritter does not include SPACs, REITs and various types of funds.
The year 2022 was poor in terms of IPOs on the American stock exchange, not only in terms of quantity or value, but also in terms of quality. The most famous and significant company that carried out an IPO in the past year was Mobileye Global. It is a producer of software for autonomous cars, which has been controlled by Intel since 2017.
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Mobileye Global quotes against the Nasdaq 100
Source: TradingView
The behavior of the listings of companies that debuted in 2022, against the background of the S&P500, also looks tragic. This is shown by the Renaissance IPO Index, which until December 23 this year. since the beginning of the year has fallen by almost -60%, while the S&P500 index has fallen by -20%.
Renaissance IPO Index against the S&P500 in 2022
Source: Renaissance Capital
The queue to the floor will move after rate cuts
Why was 2022 so weak for IPOs? Because the US Federal Reserve began to pursue a rather hawkish monetary policy in the fight against rising inflation. It started to raise rates, so the cost of money started to go up, which reduces the value of future cash flows, pushing capital out of the stock market. As long as interest rates in the US continue to rise, IPOs will be fragile.
Some experts already see various interesting businesses on the horizon that can and want to enter the American stock market in 2023. Such a list was recently prepared by the Kiplinger portal.
The list includes i.a.:
- TripActions platform (business travel service, value of USD 12 billion),
- Databricks platform enabling easy commercialization of software projects,
- company Versa Networks,
- online payment giant Stripe (valued at around $74 billion).
