Goldman Sachs Predicts Uptrend in US IPO Activity for 2024

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By Ronald Tech

Expert Forecast

In a recent report, Goldman Sachs anticipates a continuing improvement in the realm of Initial Public Offerings (IPOs) in the United States for the year 2024. The strategists at Goldman, including Ryan Hammond and David Kostin, project that the US economy will maintain its growth trajectory. They point out that the 2-year UST yield is expected to decrease marginally and that valuations will remain exceedingly high compared to historical levels.

Recent Trends

The report notes a rise in the Goldman Sachs IPO Issuance Barometer to 119, marking its highest level since February 2022. Notably, there have been 10 IPOs completed in the US exchanges this year, excluding SPACs and spin-offs, with gross proceeds totaling $1.9 billion. This pace of activity, if sustained, would surpass levels seen in 2022 and 2023.

Driving Factors

The increase in the IPO Issuance Barometer is attributed to a smaller equity drawdown and a decline in bond yields since October. The Federal Reserve’s dovish pivot in late 2023, leading to an increase in Fed easing as priced in by the market, and an expansion in equity valuations, are also identified as key drivers.

Upcoming IPOs

Bloomberg reported that a number of high-profile IPOs are expected in the second quarter of 2024. This includes upcoming offerings from Lineage Logistics, SeatGeek, Ibotta, and Rubrik – the latter being backed by Microsoft. Additionally, Reddit is anticipated to be one of the major IPOs of the year, with plans to list on the New York Stock Exchange at a valuation of at least $5 billion.

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Historical Context

Comparatively, 154 companies went public in 2023, down from 181 in 2022. In 2021, the number of public offerings was significantly higher, totaling 1,035. Last year’s total IPO proceeds amounted to $26 billion, a sharp contrast to the record $339 billion raised in 2021.

Anticipation for 2024

Beyond the named IPOs, there is the potential for several other significant offerings in 2024. These include companies such as Panera, Fanatics, Savers Value Village, Shein, Skims, and General Atlantic. Reddit’s expected IPO filing, which is likely to take place in late February, signifies the market’s robust enthusiasm for forthcoming public offerings.