The IPO market sank to a 52-week low, while the VIX Volatility Index hit a 52-week high. Fear and uncertainty over the war in Ukraine overshadowed a strong jobs report in the US, and growth stocks took a beating.
That means the IPO window will remain closed. Any investor willing to buy would rather pick up their favorite IPOs when they’re 50% off recent highs than spend time researching new deals.
Volatility has spread to global markets, and India’s largest-ever IPO, Life Insurance Corp of India, has delayed its offering to next month at the earliest.
A month ago, I said that IPO investors were optimists by nature. But we can’t hold a candle to the private market. Two more companies filed confidentially this week. And sports retailer Fanatics raised money at a $27 billion valuation, more than double its round last March. The public-private valuation gap is back. Of course, more private rounds will now include ratchets, because there will certainly be IPO down rounds.
Many Silicon Valley darlings followed the same playbook for success: Accumulate massive piles of cash and grow as fast as possible. It made sense in the era of cheap capital, but now that era appears to be ending.
On a related note, 2021 IPOs with positive free cash flow have higher returns than the rest.
Take care,
Bill Smith
Co-Founder and CEO
Renaissance Capital
PS: We put out a great recap of the February 2022 IPO market, as well as an update on
Renaissance IPO ETF (NYSE symbol: IPO) tracks the Renaissance IPO Index
The Renaissance IPO Index returned -10.0% last week vs. -1.3% for the S&P 500.
Top 5
Oak Street Health
OSH
38.7%
Albertsons Companies
ACI
21.7%
Progyny
PGNY
13.0%
nCino
NCNO
11.5%
agilon health
AGL
7.7%
Bottom 5
GoodRx Holdings
GDRX
-39.2%
TuSimple Holdings
TSP
-32.6%
Bumble
BMBL
-31.5%
Dada Nexus
DADA
-28.2%
Kanzhun
BZ
-26.6%
Sectors
Consumer Staples
-1.7%
Financials
-2.0%
Health Care
-5.4%
Industrials
-9.3%
Consumer Discretionary
-10.7%
Technology
-10.8%
Real Estate
-17.0%
