The bull market on Wall Street has continued which translates into higher share prices which translates into more supply or initial public offerings (IPOs).
In an article by Anirban Sen and Krystal Hu of Reuters, the IPO market has already total $171 billion which is greater than the $168 billion in the total year of 2020, according to data from Deallogic.
The market is expecting some big numbers in the last half of 2021 including Didi Chuxing Technology, Robinhood Markets Inc and Rivian Automative LLC.
According to Eddie Molloy co-head of equity capital markets for the Americas at Morgan Stanley, the IPO markets will continue to be very busy.
The average one day gain in IPOs has been 40.5% compared with 28.2% in 2020 and 25.5% in 2019.
Investment bankers are expecting the year end total to be between $250 and $300 billion in IPOs.
Jeff Bunzel, global co-head of equity capital markets at Deutsche Bank said $500 million used to be a pretty big IPO, now the numbers seem to be $750 million to over $1 billion.
Valuations are strong, fund flows are strong and all the ingredients that you need to have an active and successful IPO market remain intact right now.
The success of the IPO market is attracting companies that would stay private for longer periods of time said Paul Tropp, co-head of capital markets at Ropes & Gray.
Linking to dividend paying stocks, IPOs are not companies which pay dividends but it a diversified portfolio it is worthwhile owing some. However if you do buy, remember portfolio management and that means taking profits. At some point down the line, the markets will return to normal when profitable stable companies are the best investments for the long term, with your profits you can buy more dividend paying companies.
There are more questions than answers, till the next time – to raising questions.