Since the beginning of this year, under the influence of various factors such as stock market volatility, rising interest rates and banking turmoil, the initial public offering (IPO) market has continued last year's "winter" state.。And as things stand, there are few signs of a recovery in 2024.。

As of December 19, 2023, 108 companies have priced IPOs in the U.S. capital markets this year, up 52% from the same period last year.。This is the "third-to-last" figure of the past decade and is 73% lower than the all-time high of two years ago.。

In addition, IPO earnings of publicly traded companies with a market capitalization of $50 million or more, while increasing to $19.4 billion from $7.7 billion in 2022, plunged 86 percent from $142.4 billion in the same period in 2021.。

Caplight's co-founder and CEO Javier Avalos believes the IPO market doesn't appear to be unfreezing anytime soon.。Caplight has been tracking the trading of private company stocks, which are often "hotbeds" for IPOs.。

Avalos said: "At the beginning of 2024, the Pre-IPO market is not really expecting a lot of IPO activity.。He added that most investment banks "IPO schedules in the first half of the new year were largely clear.。

The root cause of IPO drying up - Fed rate hike

Multiple rate hikes sent interest rates soaring as the Federal Reserve begins to fight the nation's worst inflation in four decades。High interest rates sharply increase the cost of borrowing for startups, and the U.S. IPO market plummets in 2022。

Share offerings have yet to resume, especially after the Special Purpose Acquisition Corporation (SPAC) boom broke。In 2020 and 2021, the SPAC boom had driven IPO earnings higher than the previous five years combined.。

In addition, companies that went public this year have struggled to attract investor interest.。The biggest IPO of the year is SoftBank's chip design company Arm, which is also the largest IPO in two years.。Although Arm was listed in September, the net loss of the overall IPO in the third quarter totaled 32%。

In addition to Arm, there are several companies that are more concerned about the market, such as Instacart, an online grocery shopping service, and Klaviyo, a software platform provider.。But the two companies did not perform well after the listing.。Instacart, which went public in September, has lost a quarter of its share price so far.。Klaviyo's stock also went public in September, but lost a quarter of its value in the first six weeks after listing.。Despite the stock's rebound in November, it is still down about 15% compared to the IPO.。

Private market shows no sign of IPO rebound

Pitchbook Data, an analysis firm specializing in private equity and venture capital markets, said the economic slowdown since early 2022 has led to a backlog of companies waiting to go public, which are largely backed by venture capital.。

Pitchbook Data said there was a backlog of about 220 companies, meaning that companies looking to take advantage of changing markets could be scrambling to go public when more desirable financial market conditions exist.。

However, Avalos said the Caplight trading platform currently has more private shares for sale than for purchase, which does not bode well for the IPO market rally.。

Avalos said that when investors expect private companies to go public, they often seek to buy shares in those companies.。Generative AI companies OpenAI and Cohere now dominate two of the three most popular companies with private market share.。

Now, of the three companies with the most sought-after private market share, AI companies Open AI and Cohere have two seats.。

Avalos said, "This is an important part of demand right now, but they are not IPO candidates.。Earlier, OpenAI CEO Sam Altman said he would not consider an IPO.。Avalos also mentioned that SpaceX is also not among the IPO candidates, with the largest demand for SpaceX among private companies at the moment, mainly because investors expect the company to make another offer soon.。

IPO market not completely frozen

Pitchbook Data notes that some IPO candidates may have to readjust expectations or continue to wait。

The company's outlook report said: "Now, while profits are at a premium and lower-risk investments have brought high returns, many private companies are in trouble and may seek to exit at lower valuations.。"

Still, Avalos says there are some 2024 IPO candidates。Such as online car rental company Turo。The company has seen strong demand in the Pre-IPO market and has so far attracted nearly $500 million in funding.。

Chinese online fashion company Shein has also been revealed to be applying for a US IPO。Some reports say the company may seek up to $90 billion in funding.。

The report also suggests that social media giant Reddit may once again consider raising up to $15 billion in funding, having previously filed for an IPO in 2021.。Databricks, an estimated $43 billion data analytics company, also remains a potential candidate.。Digital payments processing firm Stripe, which went public two years ago, is also now on the news that it may once again seek up to $50 billion in financing.。