), which is now down nearly 60% from its initial pricing of $23 in early September, are contributing to a slump in the IPO market overall, said Kathleen Smith, principal at Renaissance Capital, a provider of institutional research and IPO ETFs.
The Renaissance IPO ETF , which tracks the performances of newly public companies, is down 12 percentage points over the last 3 months, while the broad S&P 500 index is up nearly 3% over the same time. The ETF fell alnother 1.3% Wednesday. The reticence on the part of public investors to buy into highly valued IPOs will likely start to eat into how private market investors gauge companies, she said. Overall, there were a record 180 private U.S. companies valued at more than $1 billion as of Sept 1, according to PricewaterhouseCoopers.
“Capital gets sloppy when it’s prolific and a lot of bad ideas get funded,” Smith said, noting that the largest discrepancies in valuations have occurred among well known technology companies while less hyped companies like Beyond Meat Inc have doubled from their IPO price. “WeWork is so obvious that it was a bad idea, but it could end up that Lyft is a bad idea and SmileDirect is a bad idea.”
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