2023 has been a disappointing year for IPOs, with a record low number of companies offering their shares publicly on stock exchanges. The chapter discusses the performance of IPOs in 2023, highlighting high-profile IPOs and their mixed returns. It explores the factors that allowed India to avoid economic challenges and the prospects for IPOs in India in 2024. The chapter also discusses the expected IPOs in 2024 and the importance of IPOs for job creation and long-term economic growth.
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Quick takeaways
2023 saw a significant decrease in IPO activity globally, with the lowest proceeds raised in 15 years.
The success of an IPO is not solely determined by financials but also by factors like market sentiment, timing, and underwriter's role in setting the issue price.
Deep dives
Challenging Year for IPOs in 2023
2023 has been a challenging year for initial public offerings (IPOs) with mixed results. Several highly anticipated IPOs were met with disappointment as their returns proved to be a mixed bag. The year was marked by a decrease in IPO activity globally, with the lowest proceeds raised in 15 years. However, experts remain optimistic about the IPO market in 2024, citing the rebounding performance of some previously disappointing IPOs and a positive trend in the IPO index. Volatility is a characteristic of IPOs, and their success is not solely determined by day one performance but also by their subsequent trading and performance.
Factors Influencing IPO Success
When it comes to IPOs, the success or failure of a listing is not solely based on the company's financials. Other factors, such as market sentiment and the perceived buzz around a company, play a significant role. Positive press coverage and a favorable market environment can contribute to a successful IPO. Additionally, timing is crucial, with IPOs performing better when there is overall optimism and investment in the stock market. The underwriter's role in setting the issue price also impacts the success of an IPO, as it must strike a delicate balance to attract investors without overvaluing or undervaluing the shares.
Outlook for 2024 IPOs
Looking ahead to 2024, there is enthusiasm and anticipation for upcoming IPOs. Tech unicorns, high-growth companies valued at over a billion dollars, are expected to go public. The market will be closely watching companies like Reddit, Skims, She-In, and Canva. While IPOs can be volatile and subject to market fluctuations, 2024 is expected to be a more active year for IPOs, especially if the successful listings lead to increased investor confidence. It is worth noting that IPOs are considered a lagging indicator of the broader economy, but their vitality and performance can serve as a proxy for economic vibrancy.
When private companies around the world want to raise cash, they can do so by starting a process to list on a stock exchange. This is known as an IPO, or initial public offering.
Analysts watch such public listings to gauge the health of an economy.
In 2021, IPOs were booming, but in 2023 there's been a big drop in activity - with a record low number of companies choosing to offer their shares publicly on stock exchanges in the US, UK and Europe.
What's going on, and why does it matter when IPOs don't do well?
(Picture: The hand of a man holding a phone, monitoring trading data on his phone, tablet, and computer. Credit: Getty Images)
Produced and presented by Frey Lindsay
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