The following research was contributed to by Christine Short, VP of Research at Wall Street Horizon.
Last week we wrote about how M&A activity has been light so far for 2024, well the same holds for IPO activity. However, this week brings two highly anticipated public debuts that could reignite hopes for an upswing in IPOs.
Astera Labs and Reddit Going Public
Astera Labs, a semiconductor company that builds connectivity solutions to help with AI and Machine Learning workloads, is set to IPO on Wednesday, March 20. The Intel-backed company will make their public debut by offering 17.8M shares in a share price range of $27 – 30, putting their IPO raise at as much as $534M, with a valuation of $5B. This will mark the first big semiconductor debut since ARM Holdings back in September. Speaking of ARM, their IPO lockup period ended on Tuesday, March 13 and was met with increased trading activity, but ultimately share prices have remained flat since then.
Reddit will make its long-awaited public debut on Thursday, March 21. The debut offering will feature 22M shares, in a price range of $31 – 34, making for a total raise amount of $715M on the high end, and a valuation of close to $6.5B.
IPO Activity Light Year-to-Date
Despite these two high-profile debuts, YTD has otherwise been light for IPOs which are still facing headwinds from higher interest rates making private companies hesitant to come to market. In January and February there were only 34 IPOs, vs. a 5-year average of 93. So far in March only NeOnc Technologies Holdings has filed for an IPO.
Looking Ahead
How Astera Labs and Reddit perform this week and in the weeks following their public entrance will likely impact how confident other private companies are in IPOing in 2024. Last year’s IPO glut was in-part due to the worse-than-expected performance of many newly public companies.1 Poor business conditions caused companies such as Reddit to delay their plans to go public. With interest rates expected to fall later this year and the continued path to a soft landing,2 this could be just the recipe needed for a resurgence in IPO activity.
Sources:
1 EY Global IPO Trends 2023, December 13, 2023 https://assets.ey.com
2 Semiannual Monetary Policy Report to the Congress, Chair Jerome Powell, March 6, 2024, https://www.federalreserve.gov
Wall Street Horizon provides institutional traders and investors with the most accurate and comprehensive forward-looking event data. Covering 9,000 companies worldwide, we offer more than 40 corporate event types via a range of delivery options from machine-readable files to API solutions to streaming feeds. By keeping clients apprised of critical market-moving events and event revisions, our data empowers financial professionals to take advantage of or avoid the ensuing volatility.
Christine Short, VP of Research at Wall Street Horizon, is focused on publishing research on Wall Street Horizon event data covering 9,000 global equities in the marketplace. Over the past 15 years in the financial data industry, her research has been widely featured in financial news outlets including regular appearances on networks such as CNBC and Fox to talk corporate earnings and the economy.
Twitter: @ChristineLShort
The author may hold positions in mentioned securities. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
