Register Surge IPO launched in 2021

The coronavirus outbreak turned the normal rhythm of the IPO market on its head, with $ 67.3 billion raised in the fourth quarter. That amount is about six times higher than the first three months of the year.

As a result of the scramble, the 21st century economy stalwart includes Airbnb Inc., Inc.

DorasDash Inc.

and Palantir Technologies Inc.

now publicly traded, accessible to the average investor.

As the pandemic began closing in on the U.S. economy in March and the stock market plummeted, old IPO viewers came in for another year of disappointment after 2019 activity short of expectations.

After some pause, new issue activity began in late May after the Federal Reserve indicated it would take drastic steps to dig up the economy, as the stock market plummeted from a steep decline.

A number of stocks started their first round then, setting the stage for a race to the public markets that is expected to pick up again in the new year after some rest.

The IPO market has boomed from a dramatic rise in special purpose construction companies, or SPACs, empty vehicles that raise money through listings and then look for businesses to join them. They represent a promise that an as yet unknown industry will create a steep product and highlight the risk appetite that fuels new issues and markets in general.

The IPO market for SPACn accounted for nearly half of all funds, and the total number raised through SPACs this year is nearly six times greater than the vehicles built in 2019, which previous year for setting records.

The IPO frenzy peaked in the second week of December, usually a quiet time for new offers as the end of the year approaches, when both Airbnb and DoorDash double in the first day of trading. That gave the two companies, which have not yet made steady profits, valuations stretching well into the tens of billions of dollars.

These gains have caught the eye of some concerned that the IPO market is overheated, drawing in parallel with the period before the internet bubble burst in early 2000. They mark an increase interest among individual investors, many of whom use a popular bankruptcy app run by Robinhood Financial LLC. If history is any direction, they say, such investors tend to run for the revolution as soon as markets go back.

Colin Stewart, Morgan Stanley‘s

The head of technology equity capital markets, said investors have “infinite interest” in some stocks, especially those that have captured the imagination of individual investors. “The movements and valuation of some stocks are not fundamentally based on business fundamentals,” he said.

Such concerns were evident when two prospective airlines decided to start after Airbnb and DoorDash – Roblox Corp. and point-of-sale lender Affirm Holdings Inc. – delay their lists. Roblox officials were particularly concerned about leaving money on the table if there is a big first-day pop at the videogame platform as well, according to people familiar with the matter.

Not all new entrants receive a warm welcome from public investors. The week after Airbnb and DoorDash created their accounts, for example, a parent closed Wish’s e-commerce site below its IPO price on the first day of trading.

Few bankers expect the current rate to slow soon.

“With interest rates close to zero, there are few asset classes that offer above-inflation yields. And U.S. equities are one of those, including IPOs, ”said Jeff Zajkowski, head of American equity capital markets at JPMorgan Chase & Co.

A series of billion-dollar-plus startups, like Robinhood itself, Coinbase Global Inc. bitcoin exchange. and Instacart Inc. grocery delivery service, waiting in the wings. Many more international companies, such as South Korean e-commerce company Coupang Corp., are considering listing on U.S. exchanges as well.

And the SPAC frenzy seems to be continuing. Well-known technology investor SoftBank Group Corp.

filing of papers for a possible SPAC at the end of December. The Japanese conglomerate is considering plans to bring at least two more to market in 2021, according to people familiar with its plans.

The movement of activity began in late May, when the largest offering since the onset of the pandemic, the IPO of insurance-policy comparison site-SelectQuote Inc., Inc.

raised $ 570 million after prices above original range. Shares rose 35% on the first day of trading.

Follow several companies, bringing more huge benefits to investors. Vroom Inc., Inc.

an online car dealer who made their debut in early June, and Lemonade Inc., Inc.

insurance start followed about a month later, more than doubling on the first day of trading. The move prompted more companies to move forward with plans for new issues.

This year’s technology IPOs – the backbone of the new magazine market – have posted the biggest gains on the first day of trading since 2000, at an average of 34% compared to 65% then, according to Dealogic. (Overall, IPOs have jumped about 18% on the first day of trading; with the exception of SPACs, the average yield of operating companies is around 36%.) On average, the 2020 IPO has gone up by about 48% off their original prices.

The high interest in some IPOs, while others lament, has made it particularly difficult for subscribers to find the right price to discuss stock at.

Take an avalanche Inc.

It went public in September at a price of $ 120, or about three times what the data company was targeting when it began marketing the shares to investors. The stock still more than doubled on the first day of trading and recently went up more than 150% from its IPO price.

In a sign companies are continuing to try out new ways to get to public markets, Palantir and Asana starter less tech Inc.

they made their first trip without raising money. The so-called direct listings, used only by four major companies, are expected to thrive in 2021 after the Securities and Exchange Commission said in December that it would allow distributors to raise capital when they use them in public.

Whatever the approach, startups are not interested in going public showing that they are declining. John Chirico, North American co-head of banking, capital markets and advisory at Citigroup Inc., Inc.

companies said “they will see the benefits and value of being public like never before.”

Write to Maureen Farrell at [email protected]