This week, Talking Biz News Deputy Editor Erica Thompson reached out to Qwoted’s community of experts to inquire about the booming IPO market in the U.S.
Check out some of the top commentary:
Vincent Lupo, managing director at U.S. Tiger Securities:
We see the IPO market continuing to surge in the coming months especially in the second half of 2021 specifically in the Asian market listing of ADR’s here in the States on Nasdaq and the NYSE. Already in the first half of 2021 there has been an Asia- element (key sponsors from Asian countries) of SPAC IPO’s totaling 23 compared to 11 in total in 2020. There has been at least 30 plus companies which have filed the F-1 publicly and are expected to be listed in the second half of this year. We also just saw the largest IPO year to date listed on 06/30/2021. To predict what happens next year is way too early.
The IPO market is reflective of an improving investment/economic environment, as companies/executives feel like they can raise more capital at advantageous valuations. This environment can continue as long as the macroeconomic/policy backdrop remains favorable, which we think will be the case for some time to come. While, there are pockets of exuberance, equity markets as a whole trade at reasonable valuations (this is not the late ‘90s all over again).
At the start of the pandemic, too much cash was chasing too few public companies. As a result, the proverbial IPO window opened and companies returned to U.S. listings.
SPACs are one mechanism for bringing early-stage companies to public markets. There is nothing inherently wrong with investing in an early-stage company, but such investments are fundamentally different than investments in established Dow darlings.
What we see today can be characterized as growing pains. Both investors and regulators are learning how to navigate the variability in SPAC targets and the associated volatility in trading.
When this is combined with a potentially over-saturated market given the number of SPACs currently on the hunt for acquisition targets, we can expect to see some of the early exuberance tamed.
I have been in the investment industry for the past 35 years and, simply put, this is the most overheated IPO market I have ever witnessed. The rise of SPACs and NFTs, cryptocurrencies, and IPOs are driven by financial markets in which there are unprecedented levels of liquidity chasing investment ideas. Creative investment banking-types flourish in such an environment. Build the security and the investors will come. Nascent investors like the “action” and exponential price gains seemingly available in these burgeoning markets. Potential investors are lured into speculating by reading the hype surrounding these assets created in the echo chambers that exist on the internet. Greed is fueling these markets as people are suffering from the fear of missing out (FOMO). Once this liquidity dries up, the various crazes (IPOs, SPACs, NFTs, and cryptocurrencies) will be over and many speculators will be disappointed in their portfolio’s performance.