Many companies, including Birkenstock and Instacart, are preparing to go public amid signs of confidence in the U.S. economy and stock market.
Growing confidence in the market: The potential for several IPOs demonstrates an increase in trust in the market.
* Chip designer firm Arm Holdings will be among the first to test the waters, pricing its shares at $51 each, which would give the company a value of approximately $55 billion.
* Companies such as Instacart and Birkenstock are expected to follow suit.
* After the rate of IPOs fell last year due to concerns about Federal Reserve interest rate hikes, there have only been 17 new listings on the New York Stock Exchange in 2023.
Economic indicators: Both the stock market and the U.S. economy has shown resilience in spite of earlier fears.
* The S&P 500 is up over 15% this year, with the tech-focused Nasdaq experiencing a rise of more than 30%.
* Though growth in the labor market has moderated, consumer spending has remained strong and economists at major banks like Goldman Sachs estimate the risk of recession within the next 12 months is only 15%.
Other potential IPOs: A number of companies have also expressed interest in going public.
* Instacart and Klaviyo, a Boston-based technology company, have already filed their paperwork.
* Birkenstock, the centuries-old shoemaker which has been slowly rebranding its “hippie” image, hopes that going public will allow it to expand its customer base.
* Despite the increased interest, experts express caution and are keen to observe how Arm performs after its debut on the Nasdaq on Thursday before predicting a surge in new IPOs.
Economic Predictions: The possibility of ongoing IPOs largely hangs on the health of the economy.
* Although recession fears have receded, they still exist, with around one-fifth of economists surveyed by the National Association for Business Economics suggesting the U.S. could be in a recession or enter one by year’s end.
* The Federal Reserve is expected to pause interest rate hikes next week, but may reintroduce them later this year if inflation does not decrease as rapidly as desired.
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