It’s not just the Highlanders suffering a recent dry spell. After a winning performance in 2021, the rate of new Initial Public Offerings (IPOs) in the first quarter of 2022 has well and truly been kicked into touch. 🏉 Based on listings tracked by Renaissance Capital, the first three months of 2022 was the slowest first quarter for companies going public in six years, with just 18 IPOs raising a mere US$2.1 billion. That is 95% down on last year and not even enough to cover the cost of Auckland’s new City Rail Link. 🚈
Last year new listings were partying like it was 1999 (also the last time the Highlanders reached a Super Rugby final 😢). When buy-now-pay-later company Affirm (AFRM) listed in January 2021, their share price jumped 90% on opening day, while Bumble (BMBL) shares soared 64% after listing. So why are companies saying nope to the IPO?
Despite the stonks start last year, the share price of many big IPOs dropped back in late 2021 as inflation roared higher. Uncertainty has continued growing in 2022, with pressure from interest rates and Russia's war with Ukraine making investors more cautious and valuations tricky. The Renaissance IPO ETF (IPO), which tracks IPO performance and includes holdings in big tech listings, including Uber (UBER), Snowflake (SNOW) and CrowdStrike (CRWD), had its worst first quarter since 2011, dropping 24%, well below the S&P 500’s 5% loss. Companies that were previously considering listing, including Stripe and Instacart, have also had their valuations cut. ✂️
Another reason could simply be that the boom of 2021 brought new listings forward. The 397 IPOs in 2021 was more than all of 2019 and 2020 combined. So just like that mountain of toilet paper we panic bought and are still working our way through (no…? just us? 🧻), there could be a lull before a fresh team of IPOs are ready to kick-off.