IPO trends in 2023 💰

Who's going public?

Aug 30, 2023

Maybe 2021 was an anomaly…

If you don’t count the tech craze of 2020 and 2021, the number of IPOs per year in the US has stayed at around 200 since 2010. The biggest peak was in 2014 where 304 companies went public, with examples from that year including Alibaba and GoPro. Stricter IPO regulations and market volatility saw low numbers in 2016, before an explosion during the pandemic years.

The 2021 IPO craze was partially fueled by tech companies over-inflated valuations, but also a surge in SPACs - Special Purpose Acquisition Companies. SPACs are essentially shell companies that sell their shares on the market, using that money to buy other businesses. The downside to a SPAC however, is that investors get their money back if the SPAC hasn’t found a business to buy within a two-year window.

During the pandemic, that worry was far from anyone’s mind - interest rates were low, and everyone was looking for an exit. In 2023, many companies that went public through a SPAC are…not doing so well. One investor who lost big time because of this was the so-called ‘King of SPACs’ Chamath Palihapitiya. Here’s a list of some of Chamath’s worst-performing buyouts:

Virgin Galactic ($SPCE): Trading at -95% since all-time high, sister companies Virgin Orbit collapsed earlier this year.
OpenDoor Technologies ($OPEN): Trading at -90% since all-time high, recently cut 22% of workforce
Clover Health ($CLOV): Trading at -93% since all-time high, recently laid off 10% of workforce
SoFi Technologies ($SOFI): Trading at -67% since all-time high

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2023 vs 2022

When comparing IPO trends between now and this time last year, several sectors are in a pretty similar place. A report by EY shows that technology had the most exits in the first half of 2022 and it’s the same this year, and industrials had the second-most in both years. However, IPOs from companies in the materials sector in 2023 are down 27%, and healthcare exits are down 28%.

Tech, industrials and consumer products are the only three sectors to have more IPOs in 2023 than 2022, with every other sector down on exits. Energy is an interesting one though - despite having 17% fewer exits this year, but the total amount of money that these deals are worth is a whopping 70% lower than last year. Despite controversial plans for further oil and gas exploration in North America, some investors are hopeful that recent regulatory provisions will see more renewable energy companies plan for an exit in the coming year.

See you on Friday for a deepdive on automobiles!

Created by Miguel