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The US IPO market has seen good growth over the years per the number of firms that went public and the valuations raised.
The American Initial Public Offering (IPO) market is booming as investors continue to back an investment pursuit amid a growing enthusiasm of plausible stock growth as the economy looks to rebound from the COVID-19 pandemic. According to data from Renaissance Capital, the proceeds from all successful American IPOs conducted this year have topped $89 billion, up 232% when compared to the same period in the past year.
The debut of new businesses on US stock exchanges has trailed a pathway in which many emerging tech outfits are looking to cash in on the growing investor interests to bolster their capital base. While tech firms dominate the American IPO market, other entities include e-commerce, health innovation outfits, and other household retailers amongst others are also prominently featured. At the current growth pace, there is a mounting expectation that the IPO proceeds this year may topple the all-time high figure of $97 billion achieved back in 2000 during the dot-com bubble as noted by Renaissance Capital.
“The valuations companies can get in the IPO market are high, historically,” said Matthew Kennedy, senior IPO market strategist at Renaissance Capital. “We attribute much of it to a decades-long buildup of unicorns and VC funding.”
American IPO Market: Current Data and Outlook
The US IPO market has seen good growth over the years per the number of firms that went public and the valuations raised. The total proceeds from the IPO market in 2019 came in at $46.3 billion, and in 2020, the figure increased to $78.2 billion. While this figure accounts for the full year proceeds in both years according to data from Renaissance Capital, a total number of 250 IPOs have priced this year with proceeds outpacing that for last year at $89 billion.
The growth of the IPO market this year is informed by increasing regulatory scrutiny on the merger option with a shell company or Special Purpose Acquisition Companies (SPAC), the other popular route for going public. As reported by CNBC, the regulatory showdown pushed the SPAC issuances down by 87% from its steaming first-quarter numbers.
The good growth is also influenced by the broader successes companies that went public have been enjoying. A notable example is the 300% growth of E-Home Household Service Holdings Ltd (NASDAQ: EJH), a Chinese appliance repair and maintenance company from the time of its public listing to date.
Amongst the proposed firms looking to go public in the coming days is Robinhood Markets Inc, a brokerage outfit where trades involving stocks and cryptocurrencies can be traded at zero commissions. While the proposed IPO of Robinhood is fraught will call for a boycott from some retail investors who were angered with the firm’s role in the GameStop Corp (NYSE: GME) short squeeze saga earlier in the year, investors are still persuaded the Robinhood IPO will be one of the biggest this year.