A robust year for initial public offerings (IPOs) has encountered significant hurdles due to a government shutdown and a shift in investor sentiment on Wall Street. The anticipated IPOs scheduled for the close of this year are likely to be deferred until 2026, as the Securities and Exchange Commission (SEC) grapples with a backlog of hundreds of registration statements. Concurrently, the performance of companies that have recently gone public has faltered amid rising concerns that stock valuations have become excessive following a substantial market rally this year.
In a recent note to investors, Bill Smith, CEO of Renaissance Capital, highlighted the challenges facing the sector: “A backlogged SEC, the approaching holiday slowdown, and pressure on AI and other tech stocks are all weighing on hopes for a near-term rebound.” Despite these difficulties, Wall Street is still anticipating several IPOs in the forthcoming months, specifically in November and December, for those already in advanced stages of the regulatory review.
One notable IPO was Central Bancompany, which successfully raised $373 million as it marked its public debut following the end of the government shutdown. However, the month of November is projected to emerge as one of the slowest periods for IPO activities, according to Renaissance Capital. Among the anticipated upcoming offerings is Medline, a medical supplies company that could potentially raise up to $5 billion in December. Additionally, the cryptocurrency technology firm BitGo is considered another candidate for a year-end IPO.
Recent IPOs have faced scrutiny as many have seen their stock prices drop sharply post-debut. For instance, Figma, a web design software company, has nearly returned to its IPO price after initially soaring more than threefold on its first trading day. Similarly, Klarna, the buy now, pay later company, priced its IPO at $40 per share but is now trading around $29. Cloud computing company CoreWeave, which debuted at $40, had brief gains but has also faced a pullback, currently trading around $72.
The overall market sentiment has been bleak in November, with the S&P 500 down 3.5% for the month, largely attributable to losses in the technology sector. While the index remains up over 12% year-to-date and the Nasdaq up over 15%, concerns regarding the sustainability of these gains have emerged, particularly regarding technology investments fueled by artificial intelligence trends.
The Renaissance Capital IPO Index has seen slight declines of nearly 0.8% this year, trailing the performance of the S&P 500 since mid-October. According to Samuel Kerr, head of global equity capital markets at Mergermarket, this trend suggests a quick monetization by investors who are wary of long-term risks.
Despite the recent market pullback, demand for IPOs continues to exist, as the broader market and technology sector remains expensive. David Kaufman, a partner at Thompson Coburn LLP, noted that there’s significant cash available from large mutual funds and managers looking for investment opportunities.
Looking ahead, the direction of the market at the start of the new year will largely influence the nature and pricing of upcoming IPOs. High-profile technology names, including AI-focused Databricks, graphic design platform Canva, and fintech firm Plaid, are under consideration for potential IPOs in 2026.
While a slowdown in IPO activity is anticipated toward the year’s end, it is essential to recognize the ongoing preparations behind the scenes as companies navigate the regulatory waters. “It’s a busy time for lawyers and bankers trying to tee things up for the first and second quarter of next year,” Kaufman added, indicating that the groundwork for a potential rebound in IPO activity is being diligently laid.
