March 9, 2022

IPOs: New Issues Check Out

As someone who’s spent most of the past two weeks alternating between obsessively watching cable news coverage of the horror show in Ukraine, doomscrolling & hiding under my desk, the news that the IPO market has hit a bit of a slump didn’t come as a shock to me.  However, I guess I wasn’t aware of exactly how bad current conditions were until I read this Bloomberg article, which says that IPOs have come to a screeching halt:

The U.S. market for new listings has shuddered to a halt and is now heading for its slowest period since the financial crisis over a decade ago. No company priced a traditional initial public offering last week amid the war in Ukraine, according to data compiled by Bloomberg, and the calendar is blank for this week as well. That means the market is on track for its first two-week period without an IPO — outside of a vacation period — since 2009.

The lack of listings coincides with the broader market extending its selloff on Russia’s invasion of Ukraine and the Cboe Volatility Index rising to the highest since January last year. What’s more, recent listings have underperformed other stocks, with U.S. IPOs conducted over the past year closing Monday an average of 30% below their offering prices, according to data compiled by Bloomberg.

Of course, the dearth of IPOs is only a part of a much bigger stock market sell-off that began well before Russia invaded Ukraine. But if there’s a silver lining here, it’s that – as the article points out – many companies that might be considering an IPO may be able to turn to the private equity markets, which are currently sitting on a boatload of cash.

John Jenkins