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IPOs went from boom to bust in 2022


Best of times to worst of times: The IPO market fell off a cliff in 2022.

Investors facing high inflation and rising interest rates have abandoned high-flying growth stocks and turned to safer and more profitable alternatives.

The decline was striking given the record level of proceeds raised on public markets a year prior. U.S.-listed companies raised more than $155 billion in revenue in 2021 from their IPOs, according to data from EY and Dealogic. In the first half of 2022, they only raised $4.8 billion.

“Investors are really risk averse right now, and that’s really impacting the lack of activity that we’re seeing,” said Rachel Gerring, head of IPO at EY Americas, in an interview with CNBC. “They are looking for companies that are more focused on growth and profitability as opposed to the growth at any cost that we were seeing in 2021.”

Part of the stalling of the IPO pipeline was caused by the dismal performance of companies that went public in 2021, Gerring said. The slowdown has also affected the market for special purpose acquisition companies, also known as SPACs, which have been used as an alternative vessel for private companies seeking to enter public markets.

“There are hundreds and hundreds of SPACs that are already public that are looking for a merger partner and any new SPAC IPO is going to be in competition with those hundreds of other SPACs,” said IPO expert Jay Ritter. stock market and professor at the University of Florida, in an interview with CNBC. “So it doesn’t make sense for a SPAC to go public now rather than wait a year for all this competition to die out.”

Watch the video above to find out how the IPO market went from boom to bust in 2022 and whether experts are predicting a rebound in 2023.

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