The Initial Public Offering (IPO) market often serves as a litmus test for investor sentiment and economic health. If that is the case today, IPO prospects in 2024 could be promising. First, let’s take a glimpse to reflect on 2023’s activity thus far.

2023: A Year of Market Selectivity

In short, 2023 has been a year of selectivity for IPO activity. While the year has been characterized by reduced volume, several sizable, landmark IPO offerings have come to fruition in 2023.

Arm Holdings Ltd.’s IPO emerged as a beacon of this new era, aiming to raise up to $4.87 billion for a valuation surpassing $52 billion, marking it as the most substantial U.S. IPO since Rivian in 2021. Instacart’s filing hinted at an end to the IPO drought, with its performance post-listing set as a barometer for future market confidence. Vinfast’s entry added to the diversity of sectors represented, further illustrating the strategic bets investors are willing to place on well-positioned companies. These pivotal IPOs reflect the market’s potential, yet also underscore the meticulous scrutiny investors apply in a volatile and uncertain market

• 1. Arm: Valued at $54.5 billion
  2. Instacart: Valued at $10 billion
  3. Klaviyo: Valued at $9 billion
  4. Birkenstock: Valued at $7.5 billion
  5. Neumora Therapeutics: Valued at $2.7 billion​​​​​​​​​​​​

The IPO market of 2023 has also shown signs of resilience.  Buffeted by a benchmark 10-year Treasury note peaking at over 5%, the IPO sector still saw an uptick in activity in Q3, with several high-profile deals reflecting a return of investor confidence. The bond market has since rallied significantly, creating a more conducive climate for IPOs as we turn the corner into the New Year.

Looking Forward to 2024

As we approach 2024, there is much optimism regarding a recovery in IPO volume.  Shein, the Chinese fashion company, reportedly recently confidentially filed for an IPO, one of the most recent signs of such optimism.  Reddit Inc, another name rumored for a 2024 IPO, is reportedly holding investor talks with potential buyers.

That said, the ability of the recent rally in equities to hold and the Federal Reserve’s policy trajectory remain critical determinants.  The upcoming presidential election introduces another variable, historically associated with market volatility, as investors speculate on potential policy changes.

IPO candidates who remain nimble and align their capital-raising cadence with market windows are most likely to succeed in going to market. A successful public offering in 2024 may also depend on articulating a compelling growth story that resonates with investors in a potentially fluctuating market. As such, companies are not only eyeing immediate opportunities but are also preparing for the long term, mindful of the broader market awareness and readiness requirements for new entrants.

Potential Major IPO Candidates for 2024

Market chatter suggests the upcoming year has several promising IPO contenders, each poised to leverage improving market conditions. High anticipation surrounds companies such as Rubrik, Reddit, Turo, Ibotta, Databricks, Zeekr Intelligent Technology Holding, ServiceTitan, Circle, Liquid Death, SHEIN, Lime, Stripe, Canva, Flexport, OpenAI, Grammarly, and Starlink. These potential candidates span a range of sectors, from cutting-edge technology to consumer services, each with a compelling growth narrative and market potential.

Investors increasingly favor companies with robust growth trajectories and clear profitability paths, indicating a strategic shift in the IPO market.  For IPO aspirants in 2024, the emphasis will be on solidifying their market position and articulating sound growth strategies.  The IPO market’s evolution from the exuberance of 2021 to the selective climate of 2023 sets the stage for what may unfold in 2024. With the recent rally in equities and Fed hikes seemingly on hold, 2024 is shaping up to be promising.

This article was written by a regular contributor who was assisted by AI in crafting the article.