The U.S. initial public offerings (IPO) market is experiencing a significant surge with an increasing number of companies choosing to go public, as stated by New York Stock Exchange President, Lynn Martin.
What Happened: During an interview, Martin expressed her opinions in the IPO market's surge in recent times. The NYSE Group Inc. has seen around 25 IPOs of operating companies on the NYSE this year, she revealed, Bloomberg reported on Monday.
"I'm incredibly optimistic given the amount of proceeds that have been raised so far in the markets," she said.
Following a slump in 2023 due to high interest rates and recession fears, the IPO market has bounced back. Two major deals, Reddit Inc. (NYSE:RDDT) and Galderma Group AG, collectively raised approximately $3 billion in March. The total funds raised in U.S. debuts in 2024 through late last month have exceeded $13.7 billion, tripling the amount from the same period last year.
According to Martin, more growth-oriented companies are finding a path to profitability through public markets.
"Companies that are either profitable or have a path to profitability are getting rewarded," she stated.
However, she also noted that corporations are being more strategic about their public debut timings.
Based on the current trend, Martin anticipates 2024 to be a typical year for IPOs, following two years of slowdown. She also hinted at a potential IPO market closure near the U.S. presidential election, as has been customary in the past.
Why It Matters: The resurgence of IPOs in 2024 comes after a couple of subdued years in 2022 and 2023, when rising inflation and interest rates impacted the market, making it difficult to price IPOs and leading many companies to pull or postpone planned IPOs.
Furthermore, market advisors echo Martin's sentiments that the November presidential elections would cause a brief slowdown in the IPO market. However, this is not anticipated to be a major disruption to the overall momentum of public listings.
Image: Shutterstock/ MaximP