It was an explosive time for initial public offerings in the first quarter, the busiest since 2000. And, if SPACs are added in, the IPO market was downright ballistic.
Renaissance Capital says there were 100 IPOs in the first quarter that raised $39.2 billion. That’s the most since the 133 IPOs in the third quarter of 2000, which raised $18.5 billion.
However, if IPOs from Special Purpose Acquisition Companies are included, accounting for about a whopping 75% of all public offerings in the quarter, the total number rockets to 398. The 298 SPACs raised $87 billion. In fact, at the current pace, there could be more than 1,000 SPAC IPOs this year. That’s more than double the 486 IPOs in 1999, at the peak of the dot-com mania. On average, the amount of IPOs in a typical year is about 200.
Renaissance Capital separates SPACs from the total for a variety of reasons.
SPACs Not Your Typical IPO
SPACs do not follow the typical IPO route. They are entities that raise funds and go looking for a company to acquire. They have brought companies such as DraftKings (DKNG) and Virgin Galactic (SPCE) to stock exchanges, but the process can be complicated and take several years to complete.
Nevertheless, SPACs have stormed Wall Street over the past year.
“The level of activity you see with SPACs today seems unsustainable,” said Matt Kennedy, an analyst at Renaissance Capital, which runs two IPO-focused exchange traded funds. “And the recent poor performance of SPACs could dampen future listings,” he said.
But no matter how it’s looked at, the IPO market in the first quarter performed like an Olympic gold medal winner.
The Most Billion-Dollar IPOs
Nine offerings raised $1 billion or more in the biggest quarter for billion-dollar IPOs ever. Korean e-commerce giant Coupang (CPNG) led the pack, along with other high-growth consumer-focused names like Bumble (BMBL), Affirm (AFRM), and Oscar Health (OSCR), it said.
Health care offerings continue to lead deal flow with a mix of biotechs and health services providers, while the tech sector produced the most proceeds, boosted by several unicorns, the Renaissance report said.
“While end-of-quarter volatility threatens to dampen activity, record filings have kept the pipeline full, and several high-profile deals are set for the second quarter,” it said.
There are currently some 89 IPO registrations on file, seeking to raise $12 billion, Kennedy said. However, Renaissance estimates there are an additional 250 companies that are IPO-ready. Some of them, perhaps about 25%, are believed to have filed confidentiality, as allowed by the SEC. These are companies with revenue of less than $1 billion that will publicly file when ready.
In addition, there are 254 SPACs on file to raise $64 billion.
Unicorns Ready To Gallop Out The Gate
Meanwhile, there’s a bundle of “unicorn” companies expected to go public sometime this year. These are companies with valuations above $1 billion.
They include Squarespace, Robinhood, Marqeta, Oatly and Instacart. Others include Flipkart, Grab, AppLovin and KnowBe4. CoinBase is planning a direct listing with a value near $50 billion.
In the first quarter, the largest IPO by deal size was Coupang at $4.5 billion, followed by dating app Bumble at $2.15 billion, then solar company Shoals Technologies (SHLS), at $1.9 billion.
Not included on this list is online gaming platform is Roblox (RBLX), which completed a direct listing and began trading at a $42 billion market cap. The Roblox IPO was the first direct listing this year.
Recent IPO stocks are where you often find some of the market’s best stocks. New IPOs are typically in their early stages of growth. Big earnings growth potential is generally what fuels an IPO stock’s price performance. IBD’s IPO Leaders section has special screening criteria to find up-and-coming stocks with strong fundamental and technical traits
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
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