The curtains are about the close on 2022’s IPOs—and it’s all quite anti-climatic.
AlphaVest, the blank cheque company (SPAC) that registered with the Securities and Exchanges Commission (SEC) on Nov. 4 is launching its $60 million IPO on Nasdaq tomorrow (Dec. 20). The company, which aims to target businesses in Asia (excluding those with China operations), is the one of the last sizable IPOs of a year that really hasn’t seen too many.
This year, IPOs hit a 32-year-low. Specifically, SPAC IPOs dipped massively from their record high in 2021. Last year, 613 SPAC IPOs raised almost $163 billion. This year, just 83 raised around $13 billion. Since the SEC stepped up scrutiny of this financial instrument, fewer SPACs formed, and thus fewer went public.
Still, SPAC IPOs comprised the largest share of US public market debuts in two decades this year—69% versus just under half the year prior.
Companies hesitated to go public via SPAC or otherwise because the capital market investors haven’t embraced IPOs and equity markets are bleeding in light of aggressive US interest rate hikes to tame inflation.
While there were nearly 300 IPOs, over 200 companies withdrew their IPOs, too.
The tech-heavy Nasdaq composite sinking is likely what prompted companies such as payroll software firm JustWorks and food retailer Fresh Market to walk back plans. In September, yogurt brand Chobani cited market volatility as a reason for backing out from going public, and the next month, grocery delivery app Instacart made a similar decision.
And the IPOs that did happen didn’t fare well. For instance, Intel-owned self-driving firm Mobileye was hoping to go public at a valuation of $50 billion, but eventually settled closer to $15 billion.
There are several companies who moved their IPO timeline from the second half of 2022 to first half 2023, Nasdaq chief financial officer Ann Dennison said in September. Two months later, the exchange’s chief Adena Friedman said the IPO lull may spill over into the new year, only to finally pick up in the second half.
Some big names are stuck in the wings. The Reddit IPO—which was meant to happen in March 2022, until Russia’s invasion of Ukraine put those plans on hold—has already been pushed a lot. That’s also the case with video-game-centered messaging firm Discord. Payment processing startup Stripe, which expressed interest in a public debut in 2021, has been holding off as it slashes its internal valuation by 28% and headcount by 14%.
There’s a chance companies will continue waiting-and-watching throughout 2023. In November, Matt Gibson, co-head of Goldman Sachs’ global technology, media and telecom group, told Bloomberg that the bank’s clients that are candidates for initial public offerings handled the private capital raised in 2020 and 2021 well enough to comfortably wait until next year or longer to launch their IPOs.