Coming Stock Week: Where Have The Unicorns Gone? The IPO window has closed

According to data from Renaissance Capital, a firm that researches and invests in IPOs, there have been only 53 IPOs so far this year, down more than 80% from the same period. in 2021. Additionally, only 94 companies filed for IPOs in 2022, down 70% from a year ago.

This means that there may not be a significant rally in new stocks debuting on Wall Street anytime soon. Still, experts hope some unicorns could hit the market later in 2022.

Grocery delivery leader Instacart filed for a confidential IPO earlier this year, meaning it doesn’t need to give out many financial details just yet. Instacart was valued at $24 billion shortly before its IPO, but that’s down sharply from its peak valuation of $39 billion in 2021.
There are also reports that private investors in Instacart have further reduced their valuations. It is not yet known exactly when Instacart will go public.
“Valuations have largely corrected from 2021 highs,” said Rachel Gerring, head of IPO at EY Americas. Gerring said falling stock prices of companies that went public last year aren’t helping. (Robinhood, Bumble, and Oatly are all 2021 IPO “graduates” who dropped this year, for example.)

“The underperformance of companies that went public in 2021 doesn’t bode well for companies looking to go public now. Companies are waiting to see how things stabilize,” Gerring said.

However, investors are also watching for other unicorn IPOs. Epic Games, the developer behind Fortnite, is an oft-mentioned IPO candidate. And, according to research firm CB Insights, which has a so-called unicorn list tracking startup valuations, Epic is worth $31.5 billion.
Crypto investment firm FTX and sporting goods firm Fanatics are also frequently mentioned in IPO rumours. FTX has a valuation of $32 billion, according to CB Insights, while Fanatics is valued at $27 billion.
And then there are the two mega unicorns. ByteDance, the Chinese owner of social media app TikTok, and Elon Musk’s SpaceX. They are both valued well north of $100 billion. Neither company has yet indicated they plan to go public in the immediate future.

Still, the IPO market is expected to open a bit later this year. Even if the biggest unicorns stay on the sidelines, other private companies could benefit from the fact that the broader market has rebounded as inflation fears have started to recede.

Will Braeutigam, head of capital markets transactions at Deloitte, said the IPO window could open in the fourth quarter of this year or early 2023 for more companies to assess offers.

“The market knows more today about inflation and how the Fed is taming it,” Braeutigam said. “The sun is rising. Things are looking up.”

What’s the Fed’s next step?

The next Federal Reserve interest rate meeting won’t be until September 21, which still seems a long way off in this fast-paced, short-term obsessed world.

But traders could get more clues on how the Fed views the outlook for inflation and the labor market at the Jackson Hole event next week.

The annual symposium, held in the Wyoming resort town at the end of August, is generally newsworthy. Personalities from the investment world and central bankers usually meet to discuss the future of the economy. This year should be no exception. Fed Chairman Jerome Powell is scheduled to deliver a speech Friday morning.

When will the price increases end?  Probably never
How aggressive will the Fed be with future rate hikes? Investors will be scrutinizing Powell’s every word for clues. Currently, fed funds futures traded on the Chicago Mercantile Exchange are pricing in terms of whether the Fed will hike rates an additional three-quarters of a point in September or a half-point in September. the place.

Powell is not likely to discuss details of future rate hikes. He is more inclined to repeat the mantra about how the Fed is “data dependent” and will now take things “meeting by meeting” when it comes to guidance.

But in light of recent economic data showing that the labor market is still strong and the inflation rate is beginning to subside, some experts are wondering if the Fed will be able to slow the pace of its rate hikes even further. There are fears that if the Fed is too aggressive, it could lead to a recession.

“Powell and other Fed members might wonder if they should stay on their current path,” said Don Calcagni, chief investment officer at Mercer Advisors. “The downside risks to the economy are very real.”

With that in mind, Calcagni said he wouldn’t be surprised if the market soon started pricing in the possibility of just a quarter-point hike at upcoming Fed meetings.

Next

Monday: Earnings of Zoom (ZM)
Tuesday: sales of new homes in the United States; Earnings of JD.com (J.D.), Medtronic (MTD), Macy’s (M), Dick Sporting Goods (SDKs), Smucker (SJM), Nordström (JWN), Toll Brothers (TOL), Advanced auto parts (AAP), Intuitive (INTU) and Urban outfitters (URBN)
Wednesday: US durable goods; Earnings of Selling power (RCMP), Nvidia (NVDA), Williams Sonoma (WSM) and Victoria’s Secret
Thursday: Fed’s Jackson Hole Symposium Begins; weekly jobless claims in the United States; revision of US GDP in the second quarter; Earnings of General dollar (CEO), dollar tree (LTRD), Abercrombie & Fitch (ANF), Platoon (PTON), Dell (Dell), Difference (GPS), Ultimate beauty (ULTA), Working day (WDAY) and affirm

Friday: Fed Chairman Powell speaks in Jackson Hole; personal income and expenses in the United States; University of Michigan Consumer Sentiment

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