US IPO Weekly Winners & Losers

We're approaching the IPO market's more active spring months. The question on everyone's mind: Will the long-awaited tech IPOs show up?

We'll soon have a better idea, based on next week's filings. Lately, the IPO market has flip-flopped between "treading water" and “improving slightly.” This past week's sell-off has put us back to treading, and threatens to dampen March listings.

The IPO Index tumbled -5.5% this week, while the S&P 500 retreated -1.7%. Some of the hottest new stocks cooled off: Tempus AI fell -23.9% as investors took gains ahead of Monday's earnings and Reddit lost -15.3% (user growth stumbled). Consumer staples led the IPO winners, with Tylenol maker Kenvue up +6.3%.

And yet, we're cautiously optimistic. Several times this year, new stocks have quickly rebounded after a sell-off. And it's not hard to find some encouraging IPO signals:

• Activity: IPO deal count and proceeds through February are at a 4-year high.

• Returns: Broader markets are near all-time highs, and the year’s larger IPOs average a +9% return. The IPO Index is up +1% YTD.

• Pipeline: New filings have so far outpaced the last two years. There's been new confidential filers (eToro, Klarna, Nouryon) and other companies testing the waters.

Zooming out from the weekly barrage of news on earnings, valuations, and rates, it's my firm belief that AI will drive more value creation than just about any invention in modern history. Over the next 5 years, the IPO market will be the front door for investment in AI startups.

There were no IPOs this past week due to the annual February pause in activity, with nothing major on the calendar for next week.

SPACs have staged a comeback. SPAC formation is on pace for a 4-year high, and it’s no coincidence that 20+ de-SPACs have rebounded 150% over the past six months (though most are below $10).