Last year, we saw the continuous improvement in the early public offering (IPO) market. More IPOs were more special objective acquisition companies (SPACs), and the IPO raised more funds than both 2022 and 2023.
Many factors were aligned. First, with inflation falling about 2%, interest rates started falling. In addition, the instability was less than 2022 and 2023. This helps the markets to rally at high levels of time on high evaluation (chart 1, purple line, cape 2021 levels), which, in turn, helps to improve the overall positive investor spirit. All these factors are our IPO pulse shows are important for a strong IPO market.
But given the data, we see not only in the number of IPOs but also in their returns because we are in 2025.
An upper number of IPOs
In the chart below, we use J Ritter data, a well aware that IPOs with long history of academic activity.
His data shows a total of 221 US equity market IPO in 2024, growth from 151 IPOs in 2023 and 178 IPOs in 2022. To be appropriate, we are still below 2021 high of 1,028, but the IPO market is definitely rebounding.
Importantly, Ritter counts American Depository Receipt (ADRS), $ 5, Spacs, reit, banks, unit offers, and companies with IPO priced under the “Other” (Light Green) category or the IPO value under the trust. The ETF Chart 1 is not included in the analysis.
Chart 1: New IPO rebound in 2024
Falling rates with more IPOs were coincident as the progress of the year
Remember in 2023, we reached the peak rate with a stalled growth after July 2023. As of September 2024, the Federal Reserve began cutting rates with a decrease in 50 basis points (BPS) in September and reduced by 25 BPS in both November and December. Overall, by the end of the year, the rate of federal funds was reduced from 2024 high to full percentage.
The IPO market reacted to the expectations of better interest rate with a higher IPO quarter in the quarter, which was topped at 76 in Q4 (or October – December). Chart 2 shows:
- Constant increase in IPOs in each quarter.
- A widening of IPOs in most areas. In fact, 10 out of 11 GICS areas saw an IPO in Q4 of 2024.
- Interestingly, only the Utilities sector did not watch an IPO in 2024. However, with all the discussions around the power requirements for AI data centers, perhaps we will see a utilities IPO in 2025.
Chart 2: IPO increased every quarter in 2024
2024 IPO raised $ 30 billion
There has also been a significant increase in raising capital compared to the previous two years. In 2024, IPO (except SPAC) raised $ 10 billion more in capital than 2023 and $ 24 billion more than 2022.
The majority of the new IPO (73%) also chose Nasdaq for its new home, with a total capital raised by a listing of $ 15.8 billion.
Chart 3: Capital raised in IPO increases
Unicorn is no longer special
In particular, 14 IPOs reached a day-one market cap over $ 5 billion one day, and five companies raised more than $ 1 billion in their offer-once thought that he was dubbed “Unicorn” IPO. Was.
The largest new listing dynasty in 2024, Inc. (Line), which provides temperature-control warehouse services and is headquartered in Michigan. The largest proposal of 2024 in this was $ 4.4 billion and it reached a market cap of $ 16.9 billion of a day.
Other large notable IPOs include:
- Kspi – With the price of $ 92 IPO, KSPI had the market cap of $ 18.1 billion of the largest first day of 2024 and the highest IPO price of the year. KSPI (KASPI.KZ AO) is a Kazakhstani company that operates payment, market and fintech platforms.
In fact, more than 90 foreign companies had an American IPO in 2024. This contributed to the trend of foreign issuers choosing American markets, possibly thanks to the high liquidity of American markets and the low cost of capital.
Day-a returns were mostly positive again
The chart 4 below contains 2024 middle day-one IPO return (sometimes called “IPO pop”). It measures the return of stock from overnight institutional placement value to close the first day of trading.
Not all IPOs go up – but most of the 2024 pre -dasters looked more as time. Another indication is that IPO market (and investor spirit) is improving. In fact, we see:
- 64% of companies had a day-to return.
- 36% of companies also had an IPO pop of more than 10%.
- Ritter’s data saw an improvement in the average IPO pop in 2024.
It compares well to 2022 and 2023, when the mean IPO pop was essentially zero (seen by the deep gray box falling under the axis), and looks familiar to the financial crisis in 2008–2009.
However, again, we are not near the height of 2020 and 2021, where it was common to see a day return of 30% or more.
Chart 4: IPO first-day return distribution
Long-term returns were stronger than 2021-2023
To buy and hold investors, long -term returns of 2024 IPOs also improved, especially compared to the last few years.
Median Return Three months post IPO 2024 performance (Green Line in Chart 5) was much better than the last two years (purple and pink lines). Importantly, as a group, 2024 IPOs have held their day-one profit throughout the year so far. However, we will note that the new 2024 IPO will not be counted for a long period of returns yet.
Chart 5: 2024 IPO performed better in the long run compared to the last three years
Unicorn promotes average returns
Overall, 2024 IPOs had an average return of 32% (Green Line in Chart 6). However, as the chart also shows, the large IPO performed better than the small IPO. In fact, most unicorn (on the right) are ahead of their IPO value, which cannot be said for small companies (left).
Chart 6: The largest 2024 outperforms saw 200%+ returns at the end of the year
We also paint the chart by the sector and the size by the capital rise. It helps to show that some areas perform better than others.
- Real estate Companies (Light Green) saw the best year with 76% average returns by the end of the year.
- energy (Gray dots) companies also performed quite well with 24% average returns.
- consumer staples (Purple) saw the lowest average return with -30% till 31 December.
We also see different demands of capital in areas:
- Health care The sector (size of red dots in Chart 6) provoked all other areas with a total increase of $ 7.5 billion during the year, but also had the highest IPO at 42.
- Real estate (Size of light green dots) saw the biggest growth per company with $ 1.1 billion.
- Material Companies (Dark Gray) saw the smallest growth per company, with a total increase of only $ 44 million in the IPOs of all materials.
Spacs saw a rebound in 2024
While the SPAC craze of 2020 and 2021 certainly ends, new active Spacs are still listed. In 2024, 58 new SPACs listed, six have announced a deal so far, and 52 are still active.
But since 2021 many Spacs have also become liquid – and only 46% of them have completed a deal.
Just some old Spacs are still active and are looking for a deal (orange bars), combined with 2022 and 2023 to 20.
Chart 7: New SPAC Listing Rebound in 2024
While SPACS is not back in 2021 sizes, he raised a significant capital in 2024. The mean Spac (Chart 8) rose to $ 168 million, slightly below 2021 $ 220 million and above 2023 $ 60 million.
However, the size of Spacs is still much smaller than the previous decade, looking at the gray box in chart 8 for 2016-2021, as all are more than 2024 boxes.
Chart 8: 2024 Spacs increased significantly higher capital than 2023
Spac prices are still around $ 10
No active Spac is trading below $ 9.92, the average active SPAC trading is at $ 10.46. Most active Spacs are clushed at $ 10 (orange circle on the left side of Chart 9).
Spacs that have announced a deal, with an average price of $ 11.43, are trading around one dollar more and no one is trading below $ 10.07. It takes one to three years active Spacs to find a deal, which takes about half to two to three. Typically, Spacs give themselves two years a period to find and complete a de-spack and sometimes three, which is why many of the 2021 Spacs that have not been a deal have not been found, in chart 7 Is liquid.
Chart 9: Active SPAC value held at around $ 10
Overall, IPO data looks better
Last year, all IPO matrix improved, the IPO market indication is certainly on the rebound. We saw better days-a return, long-term positive returns post-IPOs, more capital raising and more IPOs in the whole year than 2022 and 2023.
Important IPO improvements in 2024 should continue in 2025. We wrote two weeks ago that the US led the world in the new IPO in 2024, and we feel that the IPO revival is likely to continue in 2025.
Nicole Torski, Economic and Statistical Research Senior Specialist, contributed to this article.
