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IPO market: Watch for Panera, Shein, Skims in 2024

Arm (ARM), Cava (CAVA), Birkenstock (BIRK), and Instacart (CART) were among the companies that made their IPO debut in 2023. But these debuts did not bring about the market excitement many may have hoped for. As we move toward 2024, what should investors expect from the IPO market?

Shein, Skims, and Panera Bread are some of the 2024 IPO contenders, according to Bloomberg. Yahoo Finance’s Brooke DiPalma discusses what we may see from the IPO market next year and how some of the 2023 debuts have performed so far. For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

- All right, let's take a look at the IPO market because 2023 laid maybe the early groundwork for an IPO market comeback. We did see some splashy offerings, when you take a look at ARM, Cava, and Birkenstock. But overall, their public debuts really failed to spark much excitement about the public markets. So will 2024 be different?

We want to bring Yahoo Finance reporter Brooke DiPalma. And Brooke, when you take a look at so many of these consumer-facing names that we are expected to see go public in 2024, what are the ones that people should really keep in mind?

BROOKE DIPALMA: Yeah, I mean, Shein and SKIMS, Panera Brands making a return to the public market are some of the ones that really have Wall Street buzzing right now. And when you think about the past year, it was really a rebuild after we saw a slowdown in 2022. We saw that boom back in 2021, and now many looking forward to 2024, thinking that'll be a more robust IPO market come next year.

But what's important to note here is that when you think about Shein, they're really a low-cost, not really a luxury brand. So many focusing that if a consumer pullback happens, that Shein will still make that IPO debut. SKIMS, although on the pricier side, also not a super high luxury focused brand. So many keeping an eye on that.

And of course, Panera Brands also has to do with consumer spending. So many focused on if consumer spending remains strong, then we will see these come to market perhaps earlier than anticipated. But many factors playing into this, guys. I mean, the Fed's next move is the big question for investors right now. So really all these companies approaching more of a wait-and-see type approach to the IPO market before going full steam ahead, interest rates, inflation, and many thinking that the second half of 2024 will be more robust.

BRAD SMITH: What do you think the biggest lesson learned is from 2023 IPOs? I have my own personal opinions, but--

BROOKE DIPALMA: What did you learn, Brad?

BRAD SMITH: What in the market, what have we learned from these 2023 IPOs that actually made their way out there only for some of them to see volatility, for others to question what if we had waited until more of a cutting environment was to proceed in 2024?

BROOKE DIPALMA: Yeah, well, early part of 2023, it sort of they adhered to that wait-and-see approach. We saw many make their public debut in the latter part of 2023, but when you think about Cava, when you think about Instacart, Birkenstock, Cava, well, they soared in their IPO debut. You also had Birkenstock, they traded below their IPO debut. And Instacart, well, their valuation got a huge haircut from what it was supposed to be back in 2021.

So investors are going into 2024 very choiceful, very discerning, and really keeping a close eye on these valuations. They're very sensitive to what they saw with this 2023 IPO class. And of course, Cava now trading back to that IPO price around $42 a share. Then you have Birkenstock, now back to the IPO price after falling post-IPO.

And Instacart, still struggling to really get ahead. They're now trading below their IPO price still. So lots of momentum going into 2024, but many thinking that'll be a bit more sensitive market than perhaps all the excitement that we had back, especially in 2021.