[Asia Economy Reporter Yujin Cho] Companies that entered the U.S. New York Stock Exchange through initial public offerings (IPO) this year are continuing their spectacular debut. The IPO market, which fell into the worst recession in history last year, is now breaking its sluggish trend and showing signs of recovery.
According to Bloomberg on the 10th (local time), NextTracker, a solar equipment company listed on the Nasdaq market the previous day, closed trading at $30.46, up 26.92% from its offering price. Its market capitalization based on the closing price was $4.5 billion (approximately 5.7 trillion KRW). NextTracker raised $638 million through this listing, far exceeding the expected offering amount of $535 million, marking the best performance among companies that went public on the New York Stock Exchange this year.
NextTracker, which was expected to serve as a barometer for this year’s IPO market, succeeded in its debut, leading analysts to say that the IPO winter is beginning to thaw. Bloomberg reported that NextTracker created a new success story in the IPO market, which had fallen into the worst recession in history last year.
On the same day, Hesai Group from China, also listed on the Nasdaq market, surged 11%. Hesai Group develops and manufactures LiDAR sensors, known as the eyes of autonomous vehicles, using 3D optical sensing and distance measurement technology. The company had planned to list on the U.S. stock market in the second half of last year but withdrew due to worsening U.S.-China tensions and a sluggish stock market, before reattempting this year. Hesai Group raised $190 million through this listing, exceeding the expected offering price of $171 million. Bloomberg reported that Hesai became the largest Chinese company listed in the U.S. since Didi Chuxing, a Chinese ride-sharing platform that voluntarily delisted last year after being listed on Nasdaq in 2021.
The outlook for this year’s IPO market is optimistic. Companies that withdrew their offerings due to last year’s market downturn, like Hesai Group, are making renewed attempts. Bloomberg analyzed that the trend of Chinese companies returning to the New York Stock Exchange, after turning to the Hong Kong and Shanghai stock markets due to worsening U.S.-China tensions, is strengthening. The Wall Street Journal (WSJ) reported, "The IPO market has recently begun to show vitality," adding, "With major IPOs lined up, such as the spin-off re-listing of Johnson & Johnson’s consumer health division and the new listing of fintech company Stripe, the mood among underwriters is also turning around."
With expectations of the end of tightening, funds are flowing into the U.S. stock market, and major New York indices continue to rise. Typically, when stock trading volume increases, the IPO market also becomes more active. The Dow Jones Industrial Average on the New York Stock Exchange (NYSE) rose 2.1% last month, and the S&P 500 index increased by 5.4%, both recording their best monthly performance since November last year. There is also speculation that if macro factors such as easing inflation are further confirmed, the pace of recovery in this year’s IPO market could accelerate.
The U.S. IPO market enjoyed an unprecedented boom during the pandemic period due to abundant liquidity. The boom was driven by SPAC (Special Purpose Acquisition Company) investments and meme culture. However, last year, as central banks worldwide shifted to aggressive tightening, liquidity dried up, leading to the worst recession in history. The U.S. IPO market size last year was only $8.6 billion, marking the lowest level in 20 years.
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