What You Need To Know About the IPO Market for the Rest of 2024

The market for initial public offerings (IPOs) in the U.S. picked up in the first half of 2024, with technology and health-related deals driving gains.

IPO activity and proceeds both surged in the first half, with 80 IPOs generating $17.8 billion, representing year-over-year increases of 27% and 75%, respectively, according to a recent report from EY.

Tech and Health Sectors Drive Gains

Health and tech were the busiest sectors for IPOs in the first half, with notable debuts like Reddit’s (RDDT), the first for a social-media company since 2019.

Some of the largest IPOs by proceeds included those of cruise line Viking Holdings (VIK) and Amer Sports (AS), which manufactures sporting goods like Wilson tennis rackets and Louisville Slugger baseball bats. EY said the health and biotech industry saw large increases in IPO proceeds in specific categories like hospice and nursing-care companies.

Reddit’s stock price has more than doubled from its IPO price of $34, reaching $73.85 as of Friday’s close. Viking’s stock price has gained over 45% from its IPO price, while Amer Sports has lost about 8%.

The first half still wasn’t a recovery to the heights in activity or proceeds reached in 2021. The down period has meant a “significant and continued backlog” of venture capital-backed companies that are likely on track to an IPO, but may wait until 2025 or beyond, EY said.

“A lot of the private capital that was raised a couple of years ago was raised at pretty high valuations,” JPMorgan Chase CFO Jeremy Barnum said on Friday conference call, according to a transcript provided by AlphaSense. “And so, in some cases, people looking at IPOs could be looking at down rounds.” 

Elections, Rate Cut Uncertainty Could Hold Back IPOs in Second Half

The second half could slow compared to the first half of 2024, as elections and shifting economic conditions create an “exceptional level of uncertainty,” EY Global IPO Leader George Chan said.

Recent economic data showing inflation cooling raises the likelihood of interest rate cuts from the Federal Reserve, but uncertainty about their timing and quantity may effect some companies’ decisions about if or when to list, as well as investors’ enthusiasm for different types of companies.

Elections are also coming in the U.S. and other countries that represent nearly 60% of global gross domestic product (GDP), per EY’s data. Elections in the U.S. don’t typically have much impact on IPO activity, Chan said, but there is often more activity in the years following elections as “policy changes, economic initiatives and a stabilized market sentiment can broadly contribute to a more favorable environment” for new listings.

Some companies’ have already offered signals about an uncertain second half. Ticketing provider StubHub reportedly delayed its IPO plans until at least September. The U.S. market may have also lost out on another highly anticipated IPO, as Chinese retailer Shein reportedly filed for an IPO on the London Stock Exchange last month after facing regulatory pressure seeking a U.S. listing.