After an extremely quiet couple of years, the IPO market looks to be thawing following a number of high-profile company debuts. However, current performance indicators suggest that stock performance for new market entrants and veterans alike will be tougher for some industries than others.
Let’s dive in.
Media valuations go on a wild rise
Truth Social – the social media platform owned by the Trump Media & Technology Group – went public in February and generated a fair amount of controversy thanks to the $9 billion USD valuation it was assigned.
Experts questioned how realistic such a figure was given the limited amount of revenue delivered by the site to date. While the first day of trading started out positive, with shares up by 16%, it didn’t remain the case.
As of April 12th, Trump Media’s stock is down 50% with the overall valuation plummeting to $2.6 billion.
Meanwhile, Reddit also seems to be struggling on the public market. The popular site was at $6.4 billion during its IPO, and its $34 quickly soared by 30%.
However, by the end of March, value was down 25% while the company’s CEO and COO both offloaded 500,000 shares.
Although the public market always fluctuates, the rapid changes that these two very different media platforms are experiencing raise the question of whether media companies can go public with success to raise liquidity and grow.
Tech IPOs slowly pick up pace
Moving on from media trends, it looks like AI is breathing new life into the IPO pipeline.
In this regard, the number of companies going public in general has been extremely sluggish since the venture capital funding downturn began in 2022. With less capital to go around and high-risk economic and geopolitical conditions, many companies held off from going public.
However, 2024 could be the year the tides finally turn. 2023 closed with the largest tech IPOs for more than 18 months thanks to the public debuts of Arm, Klaviyo and Instacart. This momentum carried forward with a new trickle of debuts this year, including chip startup Astera Labs, Walmart-backed Ibotta in addition to aforementioned Reddit.
Most recently, data management unicorn Rubrik, backed by Microsoft, went public on April 25th. It’s long-awaited IPO was set between $28 and $31 for a $5.6 billion company valuation, highlighting the enduring profitability that smart software offerings can deliver.
These moves signal that public markets could soon pick up the pace and free up the funding pipeline for younger companies waiting in the wings.
The unstoppable growth of Nvidia
Finally, if there’s one company that has been able to sail through the recent economic crisis, it would be Nvidia.
Its latest quarterly report shattered even some of the most optimistic predictions with widespread demand for AI driving revenue up by a staggering 265%.
The graphics chips used for artificial intelligence have helped to generate $22.1 billion in just one quarter, tripling its revenue in a single year.
Although not all areas of the AI market are fully mature, the incredible growth of Nvidia demonstrates the sheer scale of demand for this emerging technology. In turn, this will help to stimulate the market by inspiring confidence in other AI-related companies.
