WANAN YOSSINGKUM
Initial public offering activity in the U.S. is likely to continue to improve throughout this year, according to a Goldman Sachs report.
“We expect the US economy will continue to grow, the nominal 2-year UST yield will decline modestly, and valuations will remain elevated relative to history,” Goldman Sachs strategists including Ryan Hammond and David Kostin wrote in a report on Thursday. “If soft data improve to match the hard economic data and equity investor pricing of economic growth, it could lead to a further increase in our IPO Issuance Barometer in coming months.”
The Goldman Sachs IPO Issuance Barometer rose to 119, the highest level since February 2022, according to the research report.
Excluding SPACs and spin-offs, there have been 10 IPOs completed in the US exchanges with more than $25 million in proceeds, 8 of which were for US-based companies, raising a total of $1.9 billion in gross proceeds.
If this current pace of activity is sustained, it will surpass levels from 2022 and 2023, according to Goldman
“A smaller equity drawdown and the decline in bond yields since October have been the biggest drivers behind the increase in our IPO Issuance Barometer,” Goldman’s Hammond wrote in the report. “The dovish pivot by the Federal Reserve in late 2023 led to an increase in Fed easing priced by the market and an expansion in equity valuations. At the same time, economic growth has proven to be stronger than expected despite relatively depressed levels of sentiment-linked surveys such as CEO Confidence and the ISM Manufacturing Index.”
The Goldman Sachs report comes as Bloomberg on Friday published an item on some IPOs that are expected in Q2. Lineage Logistics, SeatGeek, Ibotta and Rubrik, the latter of which is backed by Microsoft (MSFT), are all looking to go public, Bloomberg reported, citing people familiar with the matter.
Last year, 154 companies went public, compared to 181 in 2022, according to data compiled by Stock Analysis. In 2021, 1,035 companies went public. A record $339B was raised in the U.S. that year, according to data compiled by Bloomberg. Last year, that total was $26B, the data show.
Social media platform Reddit (REDDIT) is likely to be one of the next big IPOs in the U.S. this year. Reddit is expected to make a public filing in late February, introduce its roadshow in early March, and complete the IPO by the end of March, Reuters said last month. Reddit (REDDIT) is considering a valuation of at least $5B, according to a Bloomberg report from late last month. The company plans to list on the New York Stock Exchange, the WSJ separately reported earlier this month.
Several other potential big IPOs may be on the horizon for 2024, including bakery chain Panera, sports merch licensing firm Fanatics (FAN), Savers Value Village, fast-fashion name Shein, Kim Kardashian’s Skims, and investment firm General Atlantic .