The IPO deep freeze is thawing

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I know what you’re thinking: “IPO… I haven’t heard that name in years.”

Today, those three letters conjure up faraway eyes, wry smiles, and maybe a little head shake.

And as our Chart of the Week shows, a veritable deep freeze has come over the US IPO market since the start of 2022. But with big names set to make their market debut in the coming weeks, the IPO market might be the latest area investors can declare: We are so back.?

And Wall Street desperately needs companies to bring to the public market. Since the start of the third quarter, the value of companies coming public is down 69% from the same period last year.?

As Julie Hyman noted earlier this week , the Arm Holdings deal might just have what it takes to break the ice, riding some of Nvidia’s buzzy AI chip momentum as a battering ram and luring investors to take a chance on something that hasn’t already tripled its value this year.

Arm stands to be the largest IPO since late 2021, when Rivian raised $12 billion and secured a market cap north of $120 billion. Today, the company is worth less than $25 billion.?

This, of course, is one of the reasons that companies have not wanted to IPO — the market hasn’t exactly been a friendly place for new entrants.?

And if you don’t need the money, why accept a valuation that is sharply lower than 2021’s lofty heights??

But if Arm and other debuts like Instacart can give the domestic IPO market even a sliver of hope, perhaps founders and investors will be willing to test the waters. And take whatever it is the market may have on offer.?

— Ethan Wolff-Mann , Senior Editor