Main topic: The optimistic outlook for the tech industry and potential for IPOs.
Key points:
1. The discovery of room-temperature superconductors could have a significant impact on the economy, but experts are still skeptical.
2. The macroeconomic climate is improving, leading to relief in tech valuations.
3. The venture capital market is showing signs of recovery, with an increase in mega-rounds and a slowdown in tech layoffs.
4. If market conditions continue to improve, a new wave of IPOs could be on the horizon.
5. The Nasdaq's performance suggests that the software IPO window may be opening up.
6. However, the timing of when founders will be able to go public is uncertain, with predictions ranging from the second half of 2024 for SaaS IPOs.
The tech IPO market may be reawakening after a two-year lull, with Arm Holdings and Instacart expected to go public and test investor appetite for technology IPOs, although the bar for startups has become higher since 2021, leading to fewer IPOs and a need for companies to show profitability within six quarters of listing.
The IPO market experienced significant growth in 2021 but saw a decline in 2022; however, micro-cap and small-cap companies continued to dominate the U.S. IPO market in 2022 and 2023. Before going public, entrepreneurs should consider factors such as commitment, preparation, the right business model, organizational readiness, SEC compliance, scrutiny, and getting their finances in order.
Despite a record-breaking year for IPOs in 2021, the pace of new listings has slowed in 2022 and 2023 due to factors such as volatile markets and uncertainty over interest rates, but there is hope for a resurgence in 2024 if certain conditions are met.
Semiconductor chip company Arm has filed for an IPO on the Nasdaq, seeking a valuation of up to $70 billion, but faces risks and potential headwinds due to financial challenges and geopolitical tensions with China.
Arm Holdings is preparing for a highly anticipated IPO, but its pricing indicates that it will not reach Nvidia's level, despite being the largest IPO of the year.
Summary: This episode of the Equity podcast covers the upcoming earnings reports of various companies, the state of the crypto market, Arm's IPO range, the Catalyst Fund investing in climate-focused startups in Africa, Elon Musk's recent anger, and developments in the Chinese semiconductor fund and net neutrality in India.
Stocks fall as higher oil prices and rising Treasury yields put pressure on the market, while Arm prepares for its IPO with a valuation of up to $52 billion and Saudi Arabia and Russia extend their oil production cuts, causing concerns about inflation and raising Treasury yields.
Global venture funding in August 2023 reached $22 billion, a 19% increase from the previous month but a 16% decrease from July 2022, with late-stage funding experiencing a year-over-year increase for the first time in 18 months, according to Crunchbase data. However, early-stage funding nearly halved and seed funding was down by around one-third compared to the previous year, while deal counts in August 2023 were almost half of the previous year. The largest fundings were in transportation, sustainability, and biotechnology, and the hope for the startup funding landscape lies in upcoming IPOs of well-funded venture-backed companies.
U.S. investors are eagerly anticipating several upcoming IPOs in the coming months, including Arm Holdings, Instacart, Klaviyo, and VNG, as they hope to capitalize on the recent rally in equity markets.
Retail investors should be cautious when buying shares of Arm Holdings' upcoming IPO, as recent data shows that individual investors tend to lose money on blockbuster IPOs, with the 10 biggest US IPOs in the past four years down an average of 47% from their first-day closing price.
Four upcoming IPOs, including Arm, Birkenstock, Instacart, and Klaviyo, have generated hope for the struggling IPO market, but experts believe that it is not indicative of a strong resurgence in the market and predict that it will take until 2024 or 2025 for the market to fully rebound.
The IPO market has lost relevance in the real economy, but there are "absolutely enormous" opportunities in the health-care sector and private markets are switching places with public markets as the stewards of the real economy, according to the executive chairman of Partners Group.
The recent surge in IPOs, including the listing of Arm, reflects growing market confidence and economic optimism.
Stock futures point to lower opens after a strong rally, while oil remains above $90 per barrel; Adobe sees price target hikes but stock is down; United Auto Workers goes on strike; Arm's IPO success benefits banks; Instacart raises proposed price range for IPO; DoorDash transfers stock listing to Nasdaq; HSBC initiates coverage on Microsoft, Oracle, and Salesforce; China's retail sales exceed expectations; Estee Lauder stock rises.
Arm shares soared nearly 25% on its first day of trading on the Nasdaq, boosting U.S. stocks and sparking hope that the IPO market for tech companies is reviving. Additionally, positive economic data from China and a rebound in retail sales and industrial production contributed to market optimism.
Several Southeast Asian companies are considering listing in the United States for their initial public offerings (IPOs), taking advantage of strong investor appetite for emerging market growth in the absence of Chinese stock offerings.
Goldman Sachs predicts a revival in the IPO market, but warns investors to be cautious as not all IPOs will perform well; the key factors to identify successful IPOs are strong sales growth and profitability.
Wall Street's reaction to recent tech IPOs, including Instacart, Arm, and Klaviyo, has been underwhelming, with investors who bought at the IPO price making money only if they sold immediately, raising concerns about valuations.
The recent poor performance of tech IPOs, including Arm Holdings, Instacart, and Klaviyo, has raised doubts about the market's readiness for high-stakes IPOs amidst economic uncertainty and geopolitical tensions.
Instacart's IPO marks a significant moment for the tech industry and its employees, attracting attention from other late-stage tech firms as a gauge for the openness of the IPO market.
Alibaba's Cainiao has filed for a US$1 billion IPO in Hong Kong, potentially becoming the second-largest listing of 2023 and testing the appetite for new listings in the region.
September was a standout month for the IPO market, with companies like Arm Holdings, Instacart, and Klaviyo debuting on exchanges and raising $7.2 billion.
Despite a "soft open" in IPOs, the equity capital markets have seen an increase in transactions this year with high-profile IPOs collectively raising $6 billion, according to Goldman Sachs' Lizzie Reed.
