The IPO market is cracking open. This week, eToro listed its shares on the Nasdaq, and Chime filed an S-1 indicating its intent to float its shares as well. Klarna may be moving forward on its paused public listing as well.
There appears to be cautious optimism for the IPO markets, even while economic uncertainty remains. In 2024, the IPO market saw 225 offerings, a 46% increase from 2023. However, this pales in comparison to 2021, when the SPAC market supported 1035 IPOs.
Phil Haslett, co-founder of EquityZen – a private securities marketplace- says it’s encouraging to see a company go public, especially a Fintech company. The market response to Fintechs bodes well for the sector overall.
Haslett points out that eToro is the first venture-backed Fintech IPO of any meaningful size in nearly four years.
“There are a number of healthy companies that have been preparing their filings and see this as a potentially strong window to go public. Volatility is relatively low compared to the past few months, and we have a degree of macroeconomic stability—though that’s very relative. It’s also worth noting that it’s rare to see IPOs happen in the middle of summer, which is typically a slow period. Many companies are eyeing this short window—between now and the end of May or early June—as possibly their last opportunity before things pick back up in September or October,” said Haslett.
Haslet notes that a good portion of the S&P 500’s weighting is concentrated in the Magnificent Seven – about 26%. Investors are looking for performance but displaying an element of caution by targeting what has worked in the past that represents less risk.
Haslett shares that volatility and direction can change at a moments notice. In a very dynamic geopolitical world, something minor can turn into something major and then its back to risk off again. This being said, markets have regained what they lost starting from the first of the year.
“… retail investor sentiment remains lukewarm. About a third are bullish, a third bearish, and a third neutral. That’s far from the ideal environment for companies looking to go public. It creates a strange tension: markets look healthier, volatility is lower, and even tariffs may be off the table for now—but there’s still that knot-in-your-stomach feeling for companies asking, ‘Is now really the right time?’ And that uncertainty is definitely bleeding into the IPO market.”
Haslett says there’s a growing investor interest for emerging markets and an international company listing in the US can be seen as a way to tap into that interest.
“We’ve seen encouraging examples—eToro, for instance, is a company largely built internationally but with a US presence, and it’s found success. We’ve also heard that Klarna is planning to move its listing to the U.S., which could be a sign—or even a leading indicator—that more international companies may follow suit.”