4 months ago • 1 min
The initial public offering (IPO) market has been dry as dust for the last 18 months, as you can tell from the chart. Mind you, that’s hardly surprising with interest rates hikes and recessionary threats lurking around every corner.
Arm’s ready to breathe some life into the market. The chip designer’s much-anticipated listing should puff up the paltry $14 billion that’s been raised on US exchanges so far this year. But without any promise that today’s market-stalling problems are resolving, it looks like the listing’s unlikely to revive the market more broadly – especially as Arm’s in a better position than most hopefuls, with billions in sales and those hyped-up irons in the AI fire.
What’s more, investors are still cautious after getting their fingers burnt by the IPO boom of 2020 and 2021. Not only are some swerving companies that don’t have sturdy balance sheets and profitability, a bad sign for cash-seeking late-stage startups, they’re demanding cheaper prices too. Case in point: a survey by investment giant KKR showed that almost half of investors would need IPO candidates to have valuations 20 to 30% lower than those of their already listed peers before they would even consider investing. So sure, Arm’s IPO will likely be this year’s standout listing. But if you’re expecting the floodgates of fresh listings to open, you might be waiting a while.
Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.
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