The US IPO market is experiencing its busiest week since 2021, with six major CEX companies raising over $4 billion.

In the past week, the U.S. IPO market experienced its busiest week since 2021, with six large transactions raising over $4 billion. Although most IPOs saw strong demand during the pricing phase, their trading performance post-listing was relatively stable, which analysts view as a positive sign of the market returning to rationality and investors being more cautious, indicating that a healthier IPO market is forming.

The IPO market welcomes a busy period

After a sluggish start to the year, the U.S. IPO market has come back to life this week. A total of six companies, including Klarna Group Plc, Figure Technology Solutions Inc., a mainstream CEX, Legence Corp., and Via Transportation Inc., conducted IPOs, raising a total of over $4 billion, marking the busiest record since 2021. Notably, the pricing of five companies was above their marketing ranges, indicating strong demand in the market before formal trading.

The market performance is calm, and investors are becoming more rational.

Despite strong demand during the pre-sale stage, the performance of these new stocks after listing has mostly been "tepid." The opening price was 31% higher than the issue price, but the increase during the trading day quickly receded. For example, the cryptocurrency exchange led by the Winklevoss twins surged on its first day of listing but subsequently gave back most of its gains.

Analysts generally believe that this calm trading performance is not a bad thing. Mike Bellin, head of PwC's U.S. IPO business, pointed out that it indicates investors are placing greater emphasis on "profitability and fundamentals." Compared to those IPOs that surged over 120% on their first day but subsequently saw their market value cut in half earlier this year, this steady trading approach is seen as the market establishing a more sustainable "foundation."

Market Dynamics and Future Outlook

The IPO trades over the past week have also provided some key market insights:

• Institutional Demand: This is the first time since October 2021 that institutional investors are facing such a large-scale IPO supply, and they are scrambling to purchase shares of these technology, cryptocurrency, and engineering companies.
• Retail Participation: Retail investors are increasingly participating in IPO pre-purchases. In particular, in the $425 million deal of Gemini, over 20% of the shares were allocated to retail investors, which fueled the excitement in its early listing.
• Future Outlook: Despite the unusually active IPO market this week, experts predict that this "frenzy" pace will not last. Kati Penney from the multinational consulting firm CrossCountry Consulting stated that this week's activity is an "exceptional" phenomenon, primarily due to some large well-known companies going public after experiencing market fluctuations in April. She forecasts that the IPO market will return to a "stable" momentum in the coming weeks, but will not reach the levels seen this week.

Conclusion

The rebound of the U.S. IPO market this week, although not featuring any jaw-dropping surges, is a positive sign. It indicates that after the turbulence of 2022 and 2023, the market is recovering in a healthier and more sustainable manner. Investors' more rational attitude will help build a solid foundation for the IPO market, attracting more fundamentally sound companies to go public in the coming months.