Key Takeaways
- The U.S. initial public offering market recovered in the first half of 2024, with technology and healthcare-related IPOs driving gains.
- The first half of this year saw a number of notable IPOs, including social media standout Reddit.
- A variety of factors could dampen IPO activity in the second half of 2024, including the timing of elections and interest rate cuts.
The U.S. initial public offering (IPO) market recovered in the first half of 2024, with technology and health-related deals driving gains.
According to a recent report from EY, IPO activity and proceeds both surged in the first half of the year, with 80 IPOs generating $17.8 billion in proceeds, up 27% and 75%, respectively, from a year ago.
Technology and healthcare sectors drive gains
Healthcare and technology were the most active sectors for IPOs in the first half of the year, with notable debuts like Reddit (RDDT), the social media company’s first IPO since 2019.
Among the largest IPOs by proceeds were cruise line Viking Holdings (VIK) and Amer Sports (AS), which makes sporting goods such as Wilson tennis racquets and Louisville Slugger baseball bats. EY said that within the health and biotech industry, certain segments such as hospice and care companies have seen a large increase in IPO proceeds.
Reddit’s shares have more than doubled from its IPO price of $34 to hit $73.85 as of Friday’s close. Vikings shares are up more than 45% from their IPO price, while Amer Sports is down about 8%.
The first half of the year has yet to recover to the peaks of activity and revenue reached in 2021. EY said the slow period means a “significant ongoing backlog” of venture-capital-backed companies that are on track to IPO but may wait until 2025 or beyond.
“A lot of the private capital that was raised several years ago was raised at fairly high valuations,” JPMorgan Chase Chief Financial Officer Jeremy Burnham said on a conference call on Friday, according to a recording provided by AlphaSense. “So anyone considering an IPO may be considering a down round in some cases.”
Election, interest rate cut uncertainty may dampen IPO activity in H2
George Chan, global IPO leader at EY, said the second half of 2024 is likely to be slower than the first half as the election and changing economic conditions create “unprecedented levels of uncertainty.”
Recent economic data showing subsiding inflation has increased the likelihood of interest rate cuts by the Federal Reserve, but uncertainty about the timing and amount of cuts could affect decisions about whether and when some companies go public, as well as investor enthusiasm for different types of companies.
Elections are coming up in the U.S. and other countries that account for about 60% of global GDP, according to EY data. While U.S. elections don’t typically have much of an impact on IPO activity, the years after elections often see an uptick in activity as “policy changes, economic policies and stable market sentiment broadly contribute to creating a more favorable environment for new listings,” Chan said.
Already some companies are signaling uncertainty about the second half of the year: Ticket seller StubHub has reportedly postponed its IPO plans until at least September, and the U.S. market may have missed out on another highly anticipated IPO, with Chinese retailer Shein reportedly filing for an IPO on the London Stock Exchange last month after facing regulatory pressure to list in the U.S.
