(BFM Bourse) – The decline in stock indices since the beginning of the year has dried up the IPO market for US technology companies. Especially the bigger ones. There has not been a fundraiser of more than $50 million in the last 240 days. Or a new record in 20 years, says the financial times.
The days of big fundraisers for tech stocks in the US seem to be over. We are now entering a lean period. For 240 days, there has been no record of any tech company IPOs worth more than $50 million, he explains. financial time.
A sad 20-year record that nullifies the precedents established after the financial crisis of 2008 and the collapse of internet shares, the famous “.com” or dot com in English, from the early 2000s, recalls the FT based on a Morgan Stanley study.
Unsurprisingly, public listing candidates were angered by falling indices in reaction to the US Federal Reserve’s fight against record inflation. The Nasdaq Composite, the flagship index of tech stocks, is down 30% this year, compared to just over 21% for the S&P 500. The Renaissance IPO Index, which tracks U.S. companies listed on the stock market during the last two years, it has lost more than 45%, specifies the financial times.
Uncertainty, the number one enemy of IPOs
The lack of visibility induced by current market conditions discourages candidates from going public. And Jerome Powell’s latest comments on the Fed’s monetary policy direction for the coming months are unlikely to drive future trading. More rate hikes are expected until they eventually outpace inflation. A context incompatible with an IPO of technology stocks, especially since they are the most sensitive to changes in the Fed’s monetary policy.
“There is a lot of uncertainty in the market right now, and uncertainty is the enemy of the IPO market,” Matt Walsh, head of technology capital markets at SVB Securities, told the FT.
Even IPOs of well-established and profitable companies are likely to receive a lukewarm reception, explains the financial times. This is the case of the life insurer Corebridge, a subsidiary of the global insurance and financial services giant AIG. With a fundraising of over a billion dollars, making it the largest IPO of the year in the United States, this arrival tiptoed with a price set at the bottom of the range.
Even factoring in Corebridge fundraising, overall US IPO volume is down 94% from a year earlier, with just $7bn raised so far in 2022, vs. 110 billion in the same period last year, reports the financial timesciting data from Dealogic.
A reduction in aerodynamic profile to preserve profitability.
the financial times Recall that S&P 500 tech companies just hit second-quarter earnings estimates and third-quarter expectations have been lowered repeatedly, with earnings now expected to be down 4% year over year.
“Last year there was little talk of profitability [parmi les candidats à l’introduction en Bourse, NDLR]. Now there’s more, but the problem with moving from a growth story to a profit story is that it takes time for companies to attest to their progress in this area, says Nicole Brookshire, a partner at the Davis Polk law firm for the FT. . .
In the eyes of Matt Walsh, tech companies raised so much money before the market downturn that they don’t have “the same sense of urgency.” According to him, a “small group” of companies will try their luck this year. But most of these companies have already announced that they are postponing their listing project to 2023, the time to see things a little clearer…
Sabrina Sadgui – ©2022 BFM Bourse