{"id":481,"date":"2023-10-13T12:39:51","date_gmt":"2023-10-13T12:39:51","guid":{"rendered":"https:\/\/connectwithfund.com\/business\/from-birkenstock-to-instacart-ipos-are-in-a-rut\/"},"modified":"2023-10-13T12:39:51","modified_gmt":"2023-10-13T12:39:51","slug":"from-birkenstock-to-instacart-ipos-are-in-a-rut","status":"publish","type":"post","link":"https:\/\/connectwithfund.com\/?p=481","title":{"rendered":"From Birkenstock to Instacart: IPOs are in a rut"},"content":{"rendered":"
\n

\n Editor\u2019s Note: <\/b>A version of this story appeared in CNN Business\u2019 Nightcap newsletter. To get it in your inbox, sign up for free, <\/em>here<\/em>.<\/em>\n<\/p>\n<\/p>\n

\n When a company goes public it\u2019s kind of like their bar mitzvah. They\u2019ve reached adulthood and are ready to take responsibility for their actions.\n <\/p>\n

\n But a lot of companies that celebrated their \u201cbar mitzvahs\u201d lately are learning that adulting kind of sucks.\n <\/p>\n

\n Setting the scene<\/strong>\n <\/p>\n

\n The initial public offering market was booming in 2021.\n <\/p>\n

\n In just the first nine months of 2021, 785 companies went public in the US, compared to 664 for all of 1996 \u2014 the dawn of the internet stock mania, Paul La Monica reported. Some of those IPOs included Bumble, Oatly, Robinhood and Allbirds.\n <\/p>\n

\n Rivian, the electric vehicle maker, got in on the fun too in November of that year, in what was then the biggest IPO since Meta\u2019s. Shares closed nearly 30% higher on Rivian\u2019s first day of trading.\n <\/p>\n

\n But it wasn\u2019t just the IPO market that was booming. It was the entire stock market.\n <\/p>\n

\n This came as the economy started to spring back to action after pandemic restrictions were lifted and people were basically in \u201ctreat yo\u2019 self\u201d mode on steroids.\n <\/p>\n

\n The Federal Reserve played a role in it too, by keeping interest rates at near-zero levels. Investors\u2019 money wasn\u2019t tied to making loan payments as much, so they could invest more in the stock market.\n <\/p>\n

\n Then in March 2022 Fed Chair Jerome Powell et al. woke up from their transitory inflation slumber and realized they couldn\u2019t just will inflation out of existence and were like, \u201cSo, uh, yeah, I think we gotta do something.\u201d That something was raising interest rates.\n <\/p>\n

\n And with that, among other factors, the stock market\u2019s little Ferris Bueller\u2019s Day Off shindig started to unravel, as did many companies\u2019 IPO hopes and dreams.\n <\/p>\n

\n All in all, the US IPO market fell 94.8% to $8 billion in 2022, a 32-year low.\n <\/p>\n

\n Fast forward to 2023 <\/strong>\n <\/p>\n

\n Even though the Fed continued to raise interest rates, the stock market started to get out of its slump, and suddenly the IPO market came out of hibernation.\n <\/p>\n

\n The headliners of the IPO festival that\u2019s taken off this year include UK-based chip designer Arm, Instacart and Birkenstock, which made its debut earlier this week.\n <\/p>\n

\n Arm and Instacart at least got a taste of the good life before things turned south. On their first days of trading, shares of both stocks closed well above their IPO prices. They\u2019ve since lost all those initial gains, and their shares are well below their IPO prices.\n <\/p>\n

\n Poor Birkenstock closed down 13% on its IPO day Wednesday. And Thursday it closed down almost 7%.\n <\/p>\n

\n Like I said, adulting sucks. It especially sucks when a lot of turmoil is happening that\u2019s outside of your control and you\u2019re left to fend for yourself. Stocks across the board have gotten crushed because of the spike in US Treasury yields (more on that here).\n <\/p>\n

\n But the other side of this is companies may just be setting their IPO prices too high. As Nightcap wrote earlier this week, companies going public get to say how much they think they\u2019re worth by setting an IPO price. But then once trading begins investors get to judge if that\u2019s what they think it is worth.\n <\/p>\n

\n Sometimes companies even purposefully set their IPO prices low so investors get super excited and rush to buy shares, boosting the prices up. Clearly that wasn\u2019t the case with Birkenstock.\n <\/p>\n<\/p><\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Editor\u2019s Note: A version of this story appeared in CNN Business\u2019 Nightcap newsletter. To get it in your inbox, sign up for free, here. When a company goes public it\u2019s kind of like their bar mitzvah. They\u2019ve reached adulthood and are ready to take responsibility for their actions. But a lot of companies that celebrated their \u201cbar mitzvahs\u201d lately are learning that adulting kind of sucks. Setting the scene The initial public offering market was booming in 2021. In just the first nine months of 2021, 785 companies went public in the US, compared to 664 for all of 1996<\/p>\n","protected":false},"author":1,"featured_media":482,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[],"class_list":["post-481","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"yoast_head":"\nFrom Birkenstock to Instacart: IPOs are in a rut | ConnectWithFund<\/title>\n<meta name=\"description\" content=\"Editor\u2019s Note: A version of this story appeared in CNN Business\u2019 Nightcap newsletter. To get it in your inbox, sign up for free, here. 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