The initial public offering (IPO) market has stalled as 2022 heads to a close, as the Federal Reserve's hawkish moves to curb persistently high inflation have pushed many would-be year-end issuers to postpone listings.
According to data compiled by Renaissance Capital, just a little over 70 IPO pricings occured this year, raising a combined total of about $7.7 billion. That marks a year-over-year decline of roughly 82% and 95%, respectively.
That decline from 2021's IPO boom--which saw nearly 400 companies raise more than $142 billion--comes as Wall Street weighs uncertainties such as the potential for a U.S. and global economic recession, the ripple effects from the ongoing Russia-Ukraine war, and how companies and consumers will fare in a high interest rate environment for an extended period of time.
Still, that does not mean the IPO market is in for another cold year in 2023. For one thing, analysts at Goldman Sachs
"Two things are needed for ECM activity to resume: stability around inflation and visibility on the trajectory for interest rate hikes," said Edward Byun, co-head of Asia ex-Japan equity capital markets at Goldman, quoted by Bloomberg. "Once there is conviction inflation has peaked and clarity on the rate outlook -- likely in the second quarter of next year -- we will begin to see the market move forward."
Looking ahead into 2023, there are a few IPOs investors are watching out for as economic outlooks become more predictable and inflationary pressures ease -- which could cause the Fed to take a more dovish tone sometime next year.
Below are big names that may list in 2023:
Fanatics
Popular sports online retailer Fanatics has seen rapid growth over the past year, making headlines as far back as January for its $500 million purchase of trading card maker Topps.
The company as since then purchased the clothing brand Mitchell and Ness, signed a deal with Nike
Fanatics has reportedly raised $700 million in its latest funding round this month, according to CNBC, bringing its value to an estimated $31 billion. The company plans to use to the capital to focus on potential merger and acquisition opportunities for its collectibles and sports betting and gaming businesses, CNBC reports.
TripActions
Corporate travel and expenses platform TripActions has reportedly filed confidentially to go public in the second quarter of 2023 at an estimated valuation of $9.2 billion from its latest funding round back in October.
In a release, TripActions said the funding will be used for global expansion, building on the company's expense management launch in Europe and new offices in Portugal, Germany, France and the United Kingdom. The company has also made recent acquisition deals, including two European travel management companies Resia and Comtravo and high-end business travel and events servicer Reed & Mackay.
Instacart
The grocery delivery app Instacart pulled its plans to go public in 2022 back in October, with CEO Fidji Simo citing "extremely tumultuous" markets as the reason behind the delay in a memo to employees, Bloomberg reports.
However, the company is expected to go public once market conditions improve, which is expected sometime in 2023. In the October memo reviewed by Bloomberg, Simo wrote that the company remains in a strong financial position, with sales increasing by 40% year-over-year and gross profit climbing over 45%.
Valued at $39 billion in 2021 (thanks mostly to the pandemic-fueled home delivery boom), the company has since slashed its valuation to $13 billion.
