We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Can IPOs' Q3 Rebound Continue in Q4? ETFs in Focus
Read MoreHide Full Article
In the third quarter of 2023, the IPO market witnessed considerable activity, with a total of 26 initial public offerings (IPOs) jointly raising a solid $7.7 billion. The interesting fact here is that this amount matches the total proceeds raised in the whole of 2022. This occurred despite no significant increase in the number of deals compared to previous quarters.
Arm IPO Takes Charge
The chip giant Arm took the baton in the IPO activity by raising a substantial $4.9 billion. This marked the largest tech IPO since 2019 and made up for a huge 63% of the total proceeds for the quarter. The U.K.-based company hit the market in mid-September (read: Can Blockbuster Arm IPO Boost Semiconductor ETFs?).
Other Entries That Rocked: Instacart and Klaviyo
Grocery delivery platform Instacart and marketing software firm Klaviyo were close contestants, garnering attention as the first U.S.-based tech unicorns to go public in nearly two years. Both saw success.
Grocery delivery company Instacart's shares (CART) made their Nasdaq debut on Sep 19, with a 12% increase in their stock price, though the stock made an intraday high gain of 43%. Klaviyo's shares surged about 23% on market debut, gifting the marketing automation firm a valuation of $11.3 billion.
Diverse Sector Participation
Apart from the tech sector, the healthcare and consumer sectors also made significant contributions. However, only seven IPOs managed to raise $100 million or more during this period, per Renaissance Capital. Despite the overall strong IPO activity, small issuers kept the hold of the market. This had the effect of keeping the median deal size at a record-low $13 million, impacting overall performance.
The IPOs in Q3, on average, recorded a weak return of negative 32% from their offer prices. Larger IPOs with over $100 million in proceeds performed somewhat better, with average trading down by 2%. This performance was marked by solid first-day gains followed by unfortunate aftermarket returns.During Q3, Renaissance IPO ETF (IPO - Free Report) was off 1.8% versus 2.5% losses seen in the S&P 500.
What Lies Ahead?
Sandal maker Birkenstock is scheduled for listing in the fourth quarter. Despite the relatively quiet filing activity and some market volatility toward the end of the third quarter, there is still optimism about the revival of IPOs through the rest of 2023 and into 2024. Market participants are still encouraged by the return of large tech IPOs. Notably, First Trust US Equity Opportunities ETF (FPX - Free Report) lost 3.2% in the third quarter.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Can IPOs' Q3 Rebound Continue in Q4? ETFs in Focus
In the third quarter of 2023, the IPO market witnessed considerable activity, with a total of 26 initial public offerings (IPOs) jointly raising a solid $7.7 billion. The interesting fact here is that this amount matches the total proceeds raised in the whole of 2022. This occurred despite no significant increase in the number of deals compared to previous quarters.
Arm IPO Takes Charge
The chip giant Arm took the baton in the IPO activity by raising a substantial $4.9 billion. This marked the largest tech IPO since 2019 and made up for a huge 63% of the total proceeds for the quarter. The U.K.-based company hit the market in mid-September (read: Can Blockbuster Arm IPO Boost Semiconductor ETFs?).
Other Entries That Rocked: Instacart and Klaviyo
Grocery delivery platform Instacart and marketing software firm Klaviyo were close contestants, garnering attention as the first U.S.-based tech unicorns to go public in nearly two years. Both saw success.
Grocery delivery company Instacart's shares (CART) made their Nasdaq debut on Sep 19, with a 12% increase in their stock price, though the stock made an intraday high gain of 43%. Klaviyo's shares surged about 23% on market debut, gifting the marketing automation firm a valuation of $11.3 billion.
Diverse Sector Participation
Apart from the tech sector, the healthcare and consumer sectors also made significant contributions. However, only seven IPOs managed to raise $100 million or more during this period, per Renaissance Capital. Despite the overall strong IPO activity, small issuers kept the hold of the market. This had the effect of keeping the median deal size at a record-low $13 million, impacting overall performance.
A total of 24 companies went public via SPAC, including the notable electric vehicle manufacturer VinFast Auto (read: Should You Buy the Slump in VinFast? ETFs in Focus).
How Was The IPO Performance?
The IPOs in Q3, on average, recorded a weak return of negative 32% from their offer prices. Larger IPOs with over $100 million in proceeds performed somewhat better, with average trading down by 2%. This performance was marked by solid first-day gains followed by unfortunate aftermarket returns.During Q3, Renaissance IPO ETF (IPO - Free Report) was off 1.8% versus 2.5% losses seen in the S&P 500.
What Lies Ahead?
Sandal maker Birkenstock is scheduled for listing in the fourth quarter. Despite the relatively quiet filing activity and some market volatility toward the end of the third quarter, there is still optimism about the revival of IPOs through the rest of 2023 and into 2024. Market participants are still encouraged by the return of large tech IPOs. Notably, First Trust US Equity Opportunities ETF (FPX - Free Report) lost 3.2% in the third quarter.