By Close to 100 companies have recently filed confidentiality with the Securities and Exchange Commission for initial public offerings (IPOs) and are planning to list on Nasdaq, according to Adena Friedman, Nasdaq’s CEO.
A Major Rebound on the Horizon
A Historic Downturn: Slowest Period in More than 40 Years
The past two years represented the slowest period for new issues in over four decades. In 2023, there were only nine tech IPOs, and six in 2022, down from a total of 121 deals in 2021. Even a flurry of tech IPOs in September, including Arm Holdings, Klaviyo, and Maplebear (known commercially as Instacart), failed to awaken the dormant IPO market.
Positive Signs Point to a Brighter Future
While Friedman acknowledges the complex nature of our world and the potential for unexpected shocks, she believes that a stabilizing economic landscape will help reinvigorate the new-issue market. “The economy remains relatively resilient,” she affirms. “With falling inflation and the potential for lower interest rates, the stage is set for a recovery. Moreover, the 2023 IPOs, as a whole, have performed quite well.”
Anticipated Activity in the Near Future
Friedman predicts that multiple companies will attempt public offerings during the first quarter, focusing on both healthcare and technology sectors. Additionally, she expects other companies to target a debut in the second quarter.
Encouraging Venture Capital Investment and Innovation
It is becoming increasingly clear that there will be a surge in merger-and-acquisition (M&A) activity in 2024. As interest rates decline, the cost of capital will reduce, making M&A an attractive option for many companies. This trend is also expected to lead to a rise in initial public offerings (IPOs), creating healthier markets for venture capital investment and fostering company-creation.
According to industry expert Friedman, having multiple avenues for innovators and entrepreneurs to monetize their investments is crucial. While an IPO is a common path, getting acquired by a larger organization should also be seen as a viable option. This flexibility in monetization plays a key role in inspiring confidence and encouraging venture investors to take high-risk decisions.
Friedman praises the United States for its vibrant capital markets, which have positioned the country as a global leader. The ability for technology companies to innovate both organically and through acquisitions has been a driving force behind this success. The U.S. market’s dynamism and the opportunities it offers have attracted admiration from around the world.
In addition, Friedman expresses satisfaction with the recent decision by the Securities and Exchange Commission (SEC) to allow Bitcoin-based exchange-traded funds (ETFs). She believes that ETFs provide consumers with a safer way to invest in cryptocurrency compared to buying Bitcoin directly.
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