div > div.group > p:first-child"> Investors are salivating at the ocean of well-known names seeking to go public: The IPO market has continued to rebound since February, and the Renaissance Capital IPO ETF is up a whopping 32 percent this year, more than double the S&P 500.Renaissance Capital, which tracks the IPO market, counts 37 companies in registration targeting $10 billion of proceeds.
"The era when your broker called you up and said, 'We've got a hot deal for you,' is mostly over," Smith said.Sure looks that way with Lyft: the last round of funding was $15 billion, and now the ride-hailing company is reportedly trying to get $23 billion."We have a hard time coming up to that number," Smith said.
While early IPOs with reasonable valuations might do well, the broader worry is that as the number of IPOs increase into 2019, lower quality companies will be coming and there will be less pricing discipline. That's when we could see problems:"That's how the market could roll over. In IPO land, the market builds up a head of steam, and then everyone loses pricing discipline," Smith said.
Smith doesn't think so:"Our studies show that early in the IPO market recovery, returns are typically good for investors because the issuers will be higher quality companies offered at reasonable valuations." She cited Levis Strauss as a good example.Regardless of the concerns, Wall Street is excited that a major part of the capital markets business is finally starting to function after a better than four-month hiatus.
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