The U.S. initial public offering market was bound to cool off after two sensational years, including 1,015 new offerings in 2021. But it’s now in the doldrums after a period when technology stocks fell into a bear market.
In an interview from the World Economic Forum last week in Davos, Switzerland, he said when the VIX stock market volatility index VIX, +1.13% is 20 or below, indicating a stable environment, companies are more likely to want to go public. Right now, however, the VIX is above 27. Tuttle said there’s still plenty of companies who are prepared to go public once conditions settle. “I suspect the most likely scenario is you’ll see a post-Labor Day launch of IPOs, with pricing later in the month,” he said. “There is a backlog of companies that had been prepared to go out, and then market conditions became a bit more choppy.” For now, spinoffs of public companies may still test the market. American International Group AIG, +2.
Tuttle made the case that in a volatile environment, listing on the New York Stock Exchange is even more valuable. He cites data showing rival exchanges more than twice as volatile at opening auctions and three times as volatile at closing auctions. “We’ve done this for 230 years,” he said. “How we do it has evolved, but it’s all about aggregating that liquidity, having that accountability and remembering who the market serves, and that’s issuers and investors.
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