We recently introduced our new Nasdaq Stockholm IPO Pulse. Today, we update data to our pair of Nasdaq IPO pulses through September, making us realize a possible IPO environment in Stockholm and America in the beginning of 2025.
Nasdaq Stockholm IPO Pulse is still near High
Nasdaq Stockholm IPO Pulse 2, 2, reached a high level of the year, indicating that the IPO activity should remain in an upper. According to that signal, IPO activity also reached a two -year high in Q2.
In Q3, the Nasdaq Stockholm IPO Pulse fell initially, then increased in September (below chart, blue line), and is now near the 2½ years high levels of June.
Even though the Stockholm IPO Pulse lives in an upper, the IPO activity slowed down in Q3. However, it includes some seasonal trends – as many sweda are on holidays in July and August, while their days are long and the weather is hot.
Despite this, Q3 still watched the second most IPO in the last six quarters (Green Bar).
Chart 1: Stockholm IPO Pulse sees continuity in IPO activity in early 2025
Just below its recent high levels with the Nasdaq Stockholm IPO pulse, the IPO activity should remain in an upper at least 2025.
US-centered Nasdaq IPO Pulse recently near three years high
The message is the same for the US-centered Nasdaq IPO pulse.
In September, the Nasdaq IPO Pulse fell down for the second straight month, which fell to three months low (below chart, blue line). However, it is still Now! Below three years high of July.
According to the ongoing uptart in the Nasdaq IPO pulse, the IPO activity was slightly changed from Q2 of 2 of the year to Q3 from the 2 of year high (Green Bar). In fact, through Q3, we have seen the IPO for 126 operating companies and 34 Spacs in 2024.
Chart 2: NASDAQ IPO Pulse IPO sees the activity holding the next year
Therefore, with the Nasdaq IPO pulse near the three -year high, the US IPO activity should remain in an upturn earlier next year.
The rate cut starting worldwide providing tailwind for IPO activity
Interestingly, the Nasdaq IPO in the Pulse was despite the rate hike cycle of Federal Reserve.
Now, however, to cut rates with fed pivitting, after 14 months at their peak (bottom chart, red line), rates should eventually promote IPO activity.
With this deduction, Fed joined several central banks this year, including Sweden’s Ricksbank, European Central Bank (Blue Line) and Bank of England (Green Line), including some names.
The fed seems to be just starting. Fede estimates have been called for rates of falling from 5% to 3% by the end of 2026. Market fed funds see the rates of the fed funds to reach late 3.4% next year before the plateau.
Chart 3: Global Rates are expected to fall ahead
The markets are decreasing by the UK to 3.5% by the end of next year (light green line), and the rate of eurosone to 2026 (light blue line) is getting up to 1.8%.
Given this axis towards rate cuts in major economies, low rates should act as a tailwind for IPO activity in major markets around the world.
High rates spoiled IPO candidates and spoiled
There are some reasons why there were a drag on high rate IPO.
First, they are bad for evaluation. The cost of lending increases in high rates, making the future more expensive to generate future earnings. And, on margin, worse assessment results in low IPO.
Second, more immediately, high -borrowed cost hurts margin. This is especially true for small companies, with half of their loan floating rates.
We can see that the increase in the interest rate of the Fed has affected margins in smaller companies than big companies. In fact, data suggests that about 40% smaller cap loan is a floating rate compared to just 7% for larger caps. As a result, the rate of Fed Double The ratio of interest expenses for the US is about 20% to 45% (below chart, green line) for smaller cap. This is the highest this ratio has been in this century, which is different from a spikes related to a couple recession due to falling earnings.
Chart 4: High rates specifically hurt small companies, eat food in margin
Despite many other factors in support of the IPO, this increased interest expenses were one or two punch for companies considering IPOs. From the first deteriorating evaluation. Then weighing the margin, his financial picture was damaged. As the rates decline, however, this makes it easier for those companies to increase profits, which improves many microcap assessment.
And, once the election is over, another (temporary) Headwind to IPO activity will also go away.
With the disappearance of the headwind, IPO activity to stay up in 2025
Therefore, with two obstacles for IPOs, and near its recent high levels, IPO pulses, both IPO pulses, IPO activity have been set to continue in the US and Stockholm look that we have seen in the US and Stockholm look.
