It has been an eventful year since the launch of the Nasdaq IPO Pulse Index, with a steady beat signaling an upward trend in initial public offering (IPO) activity. As we stand in the middle of the year, a deep dive into the performance of IPOs brings a reassuring glow to the hearts of investors!
The encouraging news is that IPOs have sprung to life this year, with a positive performance trajectory since their IPO date.
A Flourishing Year with a Hint of SPAC Resurgence
The first half of the year witnessed a flurry of 99 IPOs spanning nine diverse sectors, where Health Care, Industrials, and Consumer Discretionary sectors led the charge. This surge reflects a robust 25% uptick in average IPO activities compared to 2023.
Surprisingly, the Materials and Utilities sectors have yet to debut any IPOs this year, with the Materials sector showing sluggish signs of earnings recovery.
An overwhelming majority of companies continue to gravitate toward Nasdaq as their preferred listing platform, as illustrated by the dominance of blue portions in the bars.
In a surprising turn of events, special purpose acquisition companies (SPACs) have seen a modest resurgence, with a total of 16 SPAC IPOs, of which seven were recorded in June – marking the highest count in a single month since April 2022.
Chart 1: Diverse IPOs in 2024 from various sectors predominantly choosing Nasdaq
Unicorn Magic Galore with 27% of IPOs in 2024
An enchanting 27% of IPOs in 2024 have touched unicorn status, boasting a staggering first-day market cap exceeding $1 billion, with 8% soaring beyond a $6 billion market cap.
Emphasizing a bright outlook for investors and potential IPO entrants, the data highlights the exceptional performance of this year’s IPO class.
The numbers show a solid IPO-issue-weighted return exceeding 15% (dashed green line) this year, with larger companies leading the pack in year-to-date returns.
Chart 2: A Magical 27% of Unicorns with Larger IPOs Taking the Lead
The Optimistic Beat of IPO Pulse for Second Half 2024
The burgeoning IPO market echoes the encouraging sentiment conveyed by the Nasdaq IPO Pulse since its inception.
Gazing ahead to the latter half of 2024, the spirited rebound in IPOs heralded at the year’s start seems poised to thrive well into the upcoming months. A noteworthy spike in the IPO Pulse to a near three-year pinnacle in June (Chart 3) underscores the continued support for IPOs through the year’s close.
Chart 3: IPO Pulse at Its Zenith, Predicting a Flourishing IPO Activity Ahead
It’s important to note that presidential elections often prompt companies to IPO earlier to evade election uncertainties, potentially boosting third-quarter IPOs. Only time will reveal if this holds true for 2024.
Contributions to this article by Michael Normyle, U.S. Economist at Nasdaq.
