Summary:
Tech startups are rushing to IPO amid improved market conditions, urged by bankers to act fast before potential volatility returns
Market stability and reduced volatility (VIX index at 17) have created a golden window for IPOs
Notable IPOs include eToro, Hinge Health, Chime, and Omada Health, all capitalizing on the current market upswing
Political risks remain, with companies like Klarna and StubHub still hesitant to re-enter the market
Bankers advise a 'go go go' approach, warning that the current favorable conditions may not last
The IPO Rush: A Golden Window for Startups
In a dramatic turnaround from last month's market slump, tech startups are now racing to go public, urged by bankers to seize the moment before potential political volatility strikes again. The recent stabilization of the markets, following President Donald Trump's rollback of severe tariffs, has created a golden window for IPOs.
Chime Co-founders Chris Britt and Ryan King. The digital banking app filed to go public last week after previously pausing its IPO plans on President Donald Trump's tariffs.
Why the Sudden IPO Frenzy?
- Market Stability: The S&P 500 has rebounded, now up about 1% since the beginning of the year, a nearly 19% increase from its April lows.
- Reduced Volatility: The VIX index, a measure of market volatility, has dropped to 17 from a high of 52 in April, signaling calmer markets.
- Pent-up Demand: A historic drought in IPOs over the last three years has created a backlog of private companies eager to go public.
Notable IPOs in the Pipeline
- eToro: The Israeli trading platform debuted via a SPAC merger, with shares popping 34% above the IPO price.
- Hinge Health: Resumed its IPO roadshow, aiming for a valuation of up to $2.6 billion.
- Chime and Omada Health: Both filed to go public in May, capitalizing on the improved market conditions.
Hinge Health launched the road show for its IPO last week. The physical therapy startup has been signaling its intentions to go public for several years.
The Risks Ahead
Despite the current optimism, bankers warn of potential political volatility that could disrupt the market again. Companies like Klarna and StubHub, which delayed their IPOs in April, have yet to re-enter the market. Medline, a surgical equipment company, remains vulnerable to tariffs due to its reliance on Chinese manufacturing.
"If you're trying to get public, now is the time to 'go go go' before something else happens," a healthcare banker told Business Insider.
The Bottom Line
The current market stability offers a rare opportunity for startups to go public, but the window may not stay open for long. Companies are advised to act quickly, while investors remain cautious about the unpredictable political landscape.
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