The US IPO market entered 2025 with renewed optimism following a stronger-than-expected close to 2024. As of May 31, traditional IPOs have raised more than $11.0 billion, slightly behind last year’s pace, signaling a continuation of the market’s tentative recovery.
This year’s activity started off stronger, marking the busiest opening stretch since the bubble year of 2021. But momentum stalled late in the first quarter amid macro headwinds, including persistent inflation, mixed signals on AI-driven valuations and the global market sell-off that occurred in April following shifting US trade and regulatory policy under the new administration.
A few IPOs struggled to price in the first quarter. After the early April tariff announcements, many in-process IPOs immediately paused as market volatility spiked. While the real economy seems to remain somewhat resilient, the Federal Reserve has adopted a wait-and-see approach. At its most recent meeting, the Fed held rates steady and reiterated its data-dependent stance.
By April, investor sentiment had grown cautious amid sharply higher volatility and policy uncertainty – highlighting the fragile nature of the current IPO window. That said, newly public companies have performed relatively well, helping sustain interest in the pipeline. SPAC issuance, on the other hand, is enjoying its most active start since 2022, with over $9.5 billion raised, though de-SPAC activity remains muted.
The time period from mid-May to early June brought a notable rebound in equity market sentiment following a 90-day pause in new tariff announcements. The IPO market responded in kind, with six companies coming to the market and all either achieving pricings above (four companies) or at the high end (two companies) of their ranges. All six opened for trading the next day at prices more than 20% above pricing (with two of the IPOs exceeding 100%).
This group included a broad sampling of company types: a financial technology company, a connected TV advertising company, a digital health platform, a crypto infrastructure provider, a defense/space tech company, and a notable consumer focused neobank. The breadth of industry sectors underscores the improving equity risk appetite in the IPO market. The success of these pricings and subsequent openings suggest the IPO window may have finally widened and investors are ready to put capital to work for companies with strong fundamentals, capital discipline and compelling equity narratives.
