2023 US IPO Outlook and 7 Most Exciting IPOs

IPOs in 2022 will face the longest drought since the global financial crisis — bankers don't expect a recovery anytime soon.

Key points:
The 2022 IPO listing crash was the worst since IPO value plummeted 73% in 2008
Why is the IPO market plummeting?
On the outlook for the initial public offering market in 2023
7 Most Anticipated IPOs of 2023
1-2022 IPO listing crash was the worst since IPO value plummeted 73% in 2008
According to KPMG data, the global IPO market reached a record high in 2021, and more than 1,000 companies went public in 2021. Although IPO activity on the world's major exchanges declined in 2022, the total amount of capital raised globally fell by 60%, and the total amount of IPO capital raised by the two major US stock exchanges fell by more than 90%. Even the numbers for special purpose acquisition companies (SPACs) are worse, down 86% from 2021.

According to data compiled by Bloomberg, IPOs in New York have raised only $24 billion in earnings so far in 2022, the worst performance since 1990. As the broader stock market soared to an all-time high, this was a 93% reversal from the 2021 record of over $338 billion.

The US IPO market has been one of the biggest drags, hit by the collapse of blank check transactions behind a sharp rise in 2021. On average, the number of people making their first appearance in the US market in 2021 has fallen by 19% since the launch, including the once highly sought-after electric vehicle startup Rivian Motor Company, which has declined by nearly 70%.

According to data from the exchange operator, Nasdaq's stock listing volume fell by about 80% in 2022. A total of 156 companies were listed on the exchange this year, and IPOs raised nearly $15 billion, far below the $180 billion bombshell raised by 743 companies in 2021.

The cash appeal from companies seeking to bolster their balance sheets is an anomaly, issuing nearly $716 billion in allotments this year, slightly below the record $759 billion in 2021.

2- Why is the IPO market plummeting?
There are many reasons for the stock market crash, such as the war in Ukraine, rising interest rates and inflation, and uncertainty about economic growth. The result is investors fleeing high-risk investments, which is common in IPOs.

The IPO market is “almost at a standstill” as investors await clarity on how much interest rates will rise. The Bank of America raised interest rates in December as expected, and the Federal Reserve Policy Committee expects to continue to raise interest rates above 5% in 2023. This is a level not seen since the sharp economic downturn in 2007, shattering hopes that the central bank will put the brakes on the interest rate hike cycle early next year.

The US stock market fluctuated for most of 2022 as the Federal Reserve took an aggressive stance on interest rates, triggering massive sell-offs.

“The reason the company did not go public is not because the open market currency is not strong; in fact, our channels are huge. The reason these companies don't go public is because of market volatility.”
David Schwimmer, CEO of LSEG Group

“Since the beginning of the pandemic, volatility has increased due to a significant increase in algorithm-driven electronic transactions, which has led to a faster and larger increase in trading volume than five years ago.
Furthermore, an analysis by Wells Fargo shows that two other factors have had the greatest impact on this year's IPO decline: changes in the forward price-earnings ratio of the S&P 500 index (greater than the absolute value of the index) and year-over-year changes in 10-year Treasury yields. Bankers believe that when these two indicators stabilize, there will be more IPO activity.

3- On the outlook for the initial public offering market in 2023
Undoubtedly, as the Federal Reserve continues to raise interest rates and enthusiasm for popular growth companies that lack historical financial data wanes, interest in newly issued shares is likely to remain quite inhibited. With the recession on the horizon, 2023 doesn't seem to be a good year for hot tech stock IPOs.

“We expect the IPO market to slowly normalize next year. The US is likely to be the first country to recover. There are initial signs of a rebound as major trade activity increases.”
Nasdaq CEO Adena Friedman said that the period of calm in the IPO market is expected to continue until the first half of 2023 and pick up in the second half of the year. Currently, about 200 companies are waiting to be listed on the Nasdaq, down from 250-300 in previous years.

“We hope the second half of '23 will be an opportunity for the company to get out of trouble, but I think we're looking forward to a calm first half.”

More than 1,200 unicorns are waiting to enter the open market. From GETTY IMAGES

John Kolz, Head of ECM US and Co-Head of ECM Global, Royal Bank of Canada Capital Markets LLC, shared：

“But for IPOs with the right story, there's a lot of cash waiting to be deployed into a huge backlog of funding plans.”
Ray Wang, founder and chief analyst of Constellation Research, told Yahoo Finance Live this week:

“You're going to see lots of IPOs coming up, and I think people are waiting for interest rates to stabilize. If the Fed can raise interest rates by 0.25% in January, I think we might have some hope,”
4-7 is most looking forward to an initial public offering in 2023
As we enter the later stages of a bear market, it will be interesting to gauge people's interest in newly issued shares. Next year's most exciting IPOs include a major chip maker, a payment processor, etc.