The resurgence in initial public offerings (IPOs) is expected to temporarily slow as the United States prepares for the November presidential election.
Market advisors and investors expect a temporary halt in IPO activity around the Nov. 5 election, but this is not expected to significantly disrupt overall listing momentum.
according to mark schwartzErnst & Young's Americas IPO and SPAC advisory leader said the election could change the timing of some IPOs, with some potentially delayed to late 2024 or 2025. , other IPOs may be brought forward.
“Whether we move forward or regress significantly depends on how the story continues to develop,” Schwartz told Bloomberg.
The IPO scene has regained some calm after a long period of stagnation, with companies raising more than $13.7 billion in the U.S. this year, surpassing the figure for the same period last year. But the current number of IPOs through April is still 92% lower compared to a record 2021, according to Bloomberg data.
Previn WorthCo-leader of Deloitte & Touche LLP's U.S. IPO services, he noted that election periods typically cause a decline in IPO activity, suggesting that companies avoid market noise in the two weeks before and after an election. I am. “It's more important to avoid the two weeks before and after the election than it is about who wins,” Wirth told Bloomberg.
Historical data from ICR Capital shows that IPOs drop significantly in November of election years, with an average of only six IPOs occurring, half the usual number. However, in general, activity increases in the months leading up to elections to compensate for the slowdown.
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Why it's important: Some companies are navigating this complex environment. Trump Media & Technology Group DJTthe entity behind the former president donald trumpplatform, Truth Social. The company's stock price has fluctuated significantly since it was listed on the Nasdaq on March 26th. This highlights the unpredictable nature of IPOs in politically volatile situations.
Reddit Co., Ltd. RDDT are also companies that are feeling the market's scrutiny. Since its initial public offering, skepticism from U.S. brokerages about the company's profitability and the looming risk of it becoming a “meme stock” has highlighted the challenges some companies face in these uncertain times. .
Both companies, like others in the IPO pipeline, remain vigilant to changes in market sentiment related to the election and are adjusting their public offering strategies to the potential for increased market noise and volatility during this period. We recommend that you do so.
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