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According to a report from Goldman Sachs, initial public offering activity in the United States is likely to continue to improve throughout the year.
“We expect the US economy to continue to grow, the nominal 2-year UST yield to decline modestly, and valuations remain elevated relative to history,” Goldman Sachs strategists including Ryan Hammond and David Kostin wrote in a report Thursday. “If soft data improves to match hard economic data and equity investors’ economic growth prices, this could lead to a further increase in economic growth. our IPO Issuance Barometer in the coming months.”
According to the research report, Goldman Sachs’ IPO issuance barometer rose to 119, the highest level since February 2022.
Excluding SPACs and spin-offs, 10 IPOs have been completed on U.S. stock exchanges with more than $25 million in proceeds, 8 of which were for U.S.-based companies, for a total of $1.9 billion in gross proceeds.
If the current pace of activity is maintained, it will surpass 2022 and 2023 levels, according to Goldman
“Lower equity picking and falling bond yields since October were the main factors behind the rise in our IPO issuance barometer,” Goldman’s Hammond wrote in the report. “The Federal Reserve’s dovish turn in late 2023 led to increased market-priced Fed easing and an expansion of equity valuations. At the same time, economic growth turned out to be stronger than expected, despite low levels of relatively depressed sentiment. Related surveys such as CEO confidence and the ISM Manufacturing Index.”
The report from Goldman Sachs comes as Bloomberg published an article on Friday about some IPOs expected in the second quarter. Lineage Logistics, SeatGeek, Ibotta and Rubrik, the latter backed by Microsoft (MSFT), are all looking to go public, Bloomberg reported, citing people familiar with the matter.
Last year, 154 companies went public, up from 181 in 2022, according to data compiled by Stock Analysis. In 2021, 1,035 companies went public. According to data compiled by Bloomberg, a record $339 billion was raised in the United States that year. Last year, the total was $26 billion, the data shows.
Social media platform Reddit (REDDIT) is likely to be one of the next big IPOs in the United States this year. Reddit is expected to issue a public statement in late February, unveil its roadshow in early March and complete its IPO by the end of March, Reuters said last month. Reddit (REDDIT) is eyeing a valuation of at least $5 billion, according to a Bloomberg report from late last month. The company plans to list on the New York Stock Exchange, the WSJ reported separately earlier this month.
Several other potential large IPOs could be on the horizon for 2024, including bakery chain Panera, sporting goods licensing company Fanatics (FAN), Savers Value Village, fast fashion name Shein, Kim Kardashian’s Skims and investment company General Atlantic.