{"id":14123,"date":"2024-02-15T18:43:50","date_gmt":"2024-02-15T15:43:50","guid":{"rendered":"https:\/\/www.robomarkets.com\/blog\/?p=14123"},"modified":"2024-02-15T18:43:52","modified_gmt":"2024-02-15T15:43:52","slug":"ipo-market-outlook","status":"publish","type":"post","link":"https:\/\/www.robomarkets.com.cy\/blog\/stock-market\/ipo\/ipo-market-outlook\/","title":{"rendered":"2024 IPO Market Outlook: Trends and Predictions for Investors"},"content":{"rendered":"\n

On 13 February 2024, we discussed trends and forecasts for the global IPO<\/a> market in 2024, looked at the largest and most anticipated flotations this year, and explored the potential risks of investing in the issuers’ stocks<\/a>.<\/p>\n\n\n\n

<\/span><\/a>2023 IPO market overview<\/span><\/h2>\n\n\n\n

According to Ernst & Young Global Limited<\/a>, the total number of global IPOs reached 1,298 flotations in 2023, raising 123.2 billion USD. In 2022, the figures were 1,415 and 184.3 billion USD, respectively.<\/p>\n\n\n\n

\"Global<\/a>
Global IPO numbers, 2019-2023<\/em>*<\/figcaption><\/figure>\n\n\n\n

As reported by PwC<\/a>, China was the largest IPO market in 2023, with 302 IPOs raising 50.4 billion USD, a decrease of 29% and 43% compared to 2022.<\/p>\n\n\n\n

The US was the second-largest market, with 154 IPOs raising 25.8 billion USD, marking decreases of 15% and 0.77% from the previous year, respectively. It is worth noting Indonesia separately, as it saw 79 IPOs on the local stock exchange raising 3.6 billion USD, reflecting increases of 32% and 60% from 2022, respectively.<\/p>\n\n\n\n

\"Global<\/a>
Global IPO proceeds, 2019-2023<\/em>*<\/figcaption><\/figure>\n\n\n\n

The largest IPOs in 2023 were held in September when Arm Holdings plc. (4.87 billion USD), Maplebear Inc. (660 million USD), and Klaviyo Inc. (576 million USD) went public. However, the results following the start of trading<\/a> disappointed investors as Arm Holdings plc stock lost 6.14% within a month of the IPO, Maplebear Inc. shares are still trading 8.73% lower than the IPO price, and in early January 2024, Klaviyo Inc.'s stock value was 18.3% lower than the IPO price.<\/p>\n\n\n\n

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Probably due to this, other large companies (such as Discord Inc., Reddit Inc., and Payward Inc.), which have continuously postponed their listing, did not dare go public. In addition, issuers were deterred by general economic uncertainty, partly caused by geopolitical events.<\/p>\n\n\n\n

However, the primary reason behind such subdued activity in the IPO market was monetary policy tightening by central banks. Even the stock market performance did not add to optimism. For example, according to Trading Economics, interest rates in the US<\/a> and the UK<\/a> rose from 0.25% to 5.50% and from 0.00% to 4.50% over the past year, respectively. An elevated interest rate typically increases the yield of conventional assets, making investments in the IPO market less appealing. Moreover, the debt burden typically rises for growth companies.<\/p>\n\n\n\n

Regarding positive IPO examples, Garden Stage Limited (NASDAQ: GSIW) was the leader among the top 10 stock gainers after the IPO, according to Stock Analysis<\/a>. Most of the top 10 companies represent the technology and healthcare sectors.<\/p>\n\n\n\n

\"Top<\/a>
Top 10 stock gainers following the IPO*<\/em><\/figcaption><\/figure>\n\n\n\n

<\/span><\/a>Factors potentially impacting the IPO market in 2024<\/span><\/h2>\n\n\n\n

<\/span><\/a>The US Federal Reserve’s monetary policy<\/span><\/h3>\n\n\n\n

According to Trading Economics<\/a>, in January 2023, US inflation stood at 6.4%, and the Federal Reserve achieved a lower figure of 3.4% in December by tightening monetary policy. However, the regulator’s actions also resulted in a noticeable decline in the IPO market activity. We have previously described the impact of interest rate hikes on this market.<\/p>\n\n\n\n

\"The<\/a>
The US inflation rate, 2023<\/em>*<\/figcaption><\/figure>\n\n\n\n

Inflation rate dynamics give reasons to presume that the Fed’s interest rate hike cycle is over, and the rate may subsequently start to decrease smoothly. This may create favourable conditions for lower capital costs for companies and stronger investor interest in IPOs.<\/p>\n\n\n\n

\"US<\/a>
US inflation rate vs US Fed funds interest rate, 2020-2024<\/em>*<\/figcaption><\/figure>\n\n\n\n

If inflation in the US continues to decrease, it will likely enable the Fed to ease monetary policy faster, potentially giving an impetus to the IPO market.<\/p>\n\n\n\n

<\/span><\/a>Geopolitical risks: military actions and the US elections<\/span><\/h3>\n\n\n\n