Several private companies are thinking about going public in 2024, including Chinese fast-fashion retailer Shein and Kim Kardashian's SKIMS shapewear brand. Although investors had high hopes for offerings in 2023, the IPO market fell short of expectations.
Rainmaker Securities Managing Director Greg Martin and EquityZen Head of Business Development & Partnerships Brianne Lynch sit down with Yahoo Finance Live to discuss sentiment on the IPO market heading into 2024 after this year's performance.
"A lot of companies that are sitting on the sidelines are waiting for one or two blockbuster IPOs to happen," Lynch explains. "So these first companies that go are choosing to be leaders and hopefully be the ones to do that."
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
- Yeah. And as you point out, the first test didn't go so great. So, Brianne, I feel like we're at this point where we were before, right, where we were looking ahead to all of these potential big issues coming out. And it was going to crack the IPO market open again. And that's not what we saw because, I guess, the test failed. What do you think? Is the test this time going to work?
BRIANNE LYNCH: I think it's a great question. And Greg touched on some of those macro points that would suggest that this is a good market. You also have GDP that's strong, job growth that's strong, likely end of rate hikes or even cuts coming up.
So from a macro perspective, you would think that now is a good time. But I think a lot of companies that are sitting on the sidelines are waiting for one or two blockbuster IPOs to happen, go well, kind of warm the investor market, and encourage others to follow. So these first companies that go are choosing to be leaders and hopefully be the ones to do that.
So SHEIN being one of these companies, looking at a $80 to $90 billion valuation. The question is, can they be the one to prove that, you know, others are interested in IPOs? Given the growth they've had and the success of their business, they could be that company. But there's also a lot of hair that comes with their specific business model and some of the concerns that have been raised.
- And, Greg, you know, Brianne there just mentioned, you know, companies waiting on the sidelines. And you're the perfect guy to ask this. What is the pipeline like right now, Greg? I mean, are there a lot of startups waiting in the wings right now, ready to take that public market plunge?
GREG MARTIN: Well, the backlog is very deep. There's a lot of companies that were preparing to go public at the end of '21 and expecting a similar year in 2022. So there is a very deep pipeline of companies that would like to go public for a variety of reasons. Some is just a lot of liquidity needs with investors. Some is just sort of funding the continued growth of their business. And, obviously, we saw the last pretty much two years the IPO market being dead.
So there's definitely a fertile pipeline. But I do think that it's going to be-- there's sort of a phase approach that I think we're going to see. And that's the really high-quality companies that are going to test the market first. And I think if we start to see good performance and new issuances and strong investor demand, then the floodgates may open. But I think we're a quarter or two away from seeing that because I think the market really is taking a wait-and-see approach as to how these new issuances perform.