US IPO Weekly Winners & Losers

The IPO market is treading water, but we still see a gradual pickup on the horizon.

Normally IPO activity builds momentum in the second quarter, and peaks in June. While markets are still recovering from bank-failure volatility, we expect that a number of IPOs target summer listings.

The chart below shows the average number of IPOs each month in a normal year (orange) compared to the actual and forecasted number this year (green/blue). We used a $50mm deal size to strip out micro-caps.

Yes, the banking sector has simmering issues, and a recession looks like a matter of when, not if. At the same time, investors know that certain asset classes (including new stocks) will lead the rebound when it does arrive. In January we saw that rallies can happen quickly.

For now, we’re mostly getting micro-caps. Three very small deals priced and traded down, from China (GDHG), Malaysia (VCIG), and Singapore (GDTC). Two sizable IPOs filed, inflammation biotech ACELYRIN and insurer Fidelis Insurance.

Five SPAC mergers have gone bankrupt this year, tying the full-year 2022. About half of de-SPACs from the past 2 years trade below $2, making investors look at them as either a “bargain or bankruptcy.” One de-SPAC listed this week, Bitcoin miner Bitdeer (Nasdaq: BTDR). Bitcoin is up +83% this year.

The IPO market Index rose +1.1% this week, vs. the S&P 500’s +0.8%. The industrials sector led, up +8.0%, and included top IPO performers ZIM Integrated Shipping (+24.5%) and Core & Main (+12.3%). Cloud services firm DigitalOcean landed in last (-10.7%).