Three-quarters of last year's tech IPOs now trade below offer price
There is a view emerging that concerns about overheating investment in artificial intelligence (AI) technology stocks could also affect the initial public offering (IPO) market. Analysts say that the strong expectations for IPOs of unlisted tech companies at the beginning of the year have faded.
According to an analysis by market research firm Dealogic of companies that raised at least 50 million dollars (about 72 billion won), three-quarters of the tech stocks that listed last year are now trading below their IPO offer prices. In addition, as of the closing price on the 23rd, last year’s cohort of listed tech companies had fallen by an average of 21%. The three tech companies that went public this year had dropped by an average of 36% as of the close on the 23rd.
The Wall Street Journal (WSJ) reported that fund managers who were optimistic about new IPOs at the beginning of this year are now withdrawing their investment intentions. The main reason cited is that the wave of selling in tech stocks has made it difficult to predict future performance. Some have judged that, rather than taking on risk by investing in newly listed software companies, it is better to buy shares cheaply in companies that are already listed and whose stock prices have fallen sharply. Some observers also predict that virtual-asset companies could outperform traditional tech companies.
Liftoff Mobile, a marketing platform backed by Blackstone, scrapped its IPO plan earlier this month, and fintech-based brokerage Clear Street also recently halted its IPO plan, citing deteriorating market conditions.
However, the heat around tech IPOs is not expected to cool completely this year. A few large-scale IPOs could drive the entire market. SpaceX, the space company led by Tesla CEO Elon Musk, is scheduled to go public between June and July. SpaceX is targeting a valuation of more than 1 trillion dollars, and there is speculation that it could become the largest IPO in history. OpenAI and Anthropic, the most highly anticipated AI players, are also considering listings toward the end of this year.
Matt Whittal, head of late-stage growth at Wellington Management, said, "Large companies will attract enormous demand. Everyone will want to own their shares," adding, "In the software industry, the value of some companies could go to zero (0)."
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