IPO Frenzy

Issue 37

09.21.20 - Private companies have been in an absolute mad dash to make their debuts on the New York Stock Exchange recently. The market has been sizzling hot for initial public offerings, and cloud companies Snowflake and JFrog, as well as the gaming tool developer Unity Software, have demonstrated the strong demand for new stocks this past week. Many experts suggest that the Federal Reserve's decision to keep interest rates at near-zero for the foreseeable future has assisted in building this demand for IPOs and the stock market overall.

Troy Hooper, head of IPO content at Mergermarket, said recently, "IPOs are doing well and I guess that's what happens when you have the Fed pumping money into the financial system. The money has to go somewhere."

Many companies are also choosing alternative routes to list on Wall Street through mergers with blank check, special purpose acquisition companies (SPACs). Notable companies, such as DraftKings, have gone public through SPACs, and electric vehicle makers Hyliion and Lordstown Motors are planning to go public through a SPAC as well.  According to Reuters, Playboy is also considering a return to Wall Street via a merger with a SPAC.

There is no denying the demand for new stocks is very strong and there is a long waiting list of companies who could possibly go public in 2020 such as Airbnb, DoorDash, and Jack Ma's Ant Group, the financial arm of Alibaba which will be looking to go public in Hong Kong and Shanghai before year-end, too.

Source: Reuters