The WSJ reports that the IPO market is booming. There have been 120 companies that have raised $35.2 billion in the first six months of 2018. That’s the fourth-busiest six-month period on record. And that’s not even counting initial coin offerings (ICOs) which are booming as well even as bitcoin prices plummet.
Rising IPO volume isn’t necessarily a predictor of a market top, but it should be viewed as a signal of caution.
“Our global IPO pipeline is stronger now than it’s been since the financial crisis,” said Evan Damast, global head of equity and fixed income syndicate at Morgan Stanley .
Companies that have gone public in the U.S. this year are trading, on average, 22% above their IPO price, and technology companies have done particularly well, up 53% above their IPO price, according to Dealogic data through Thursday’s close of trading. Meanwhile, the S&P 500 rose less than 2% for the year and the tech-heavy Nasdaq Composite climbed 8.7%, during the same period.
“This year we’re finding the investor demand for technology IPOs is literally the highest we’ve ever seen both in terms of the quantity and quality of interest,” said Madhu Namburi,JPMorgan Chase & Co.’s head of technology investment banking.
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Jeremy Jones, CFA
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