The $171 billion of US IPOs in 2021 is already a full-year record

Coinbase IPO
  • Initial public offerings in the US this year have already broken 2020’s record with six months still go in the year.
  • Sky-high valuations in the stock market thanks to stimulus packages and the Federal Reserve’s low interest rate policies are driving the boom.
  • By the end of 2021, US IPOs could potentially raise a staggering $250 billion-$300 billion.
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Initial public offerings in the US this year have already broken 2020’s record with six months to go.

In the first half of this year alone, IPOs have raised $171 billion, surpassing last year’s record $168 billion, according to Reuters, citing data from Dealogic.

The average one-day gain for IPOs this year is 40.5% versus the 28.2% during the same period in 2020 and 21.7% in 2019, the report said.

Furthermore, the average one-week return this year is 35.7%, an increase from 2020’s 32.2% and 2019’s 25.5%.

This doesn’t come as a surprise with this year’s blockbuster IPO including South Korean e-commerce firm Coupang, which has raked in $67 billion, cybersecurity firm Darktrace, and cryptocurrency exchange Coinbase Global.

There is a slew of hotly anticipated IPOs still to come, with upcoming debuts by payments giant Stripe, Chinese ride-hailing firm Didi Chuxing, and trading platform Robinhood, among others.

Among the many factors driving the surge in companies going public, from traditional IPOs to SPACs, is the heady valuation of the stock market due in large part to the flush of stimulus packages passed during the pandemic and the Federal Reserve’s low interest rate policies.

“Five-hundred million used to be a pretty big IPO,” Jeff Bunzel, global co-head of equity capital markets at Deutsche Bank told Reuters. “Nowadays everything seems to be in the billions or three-quarters of a billion-plus. So there’s really been an explosion in the size of transactions as well.”

By the end of 2021, US IPOs could potentially raise a staggering $250 billion-$300 billion or more, data from Dealogic showed.

Meanwhile, SPACs, a popular route to public markets used by many startups, have boomed as well.

In 2020, a total of 248 SPACs raised $83.3 billion according to SPAC Analytics. But 2021 data already shows 340 SPACs have raised $106 billion just six months into the year.

Read more: Bank of America flags 26 stocks to buy that are also hugely popular among giant Wall Street investors

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Airbnb and DoorDash’s post-IPO stock pops represent an ‘epic level of incompetency,’ says a former banker who led one of the world’s largest IPOs ever

Imran Khan
  • Imran Khan told CNBC on Tuesday that the recent post-IPO stock pops including those of Airbnb and DoorDash represent an  “epic level of incompetency” from the bankers who underwrote the stocks.
  • The former banker, who led Alibaba’s IPO in 2014, said that it’s the job of the bankers to understand the market and price the IPO’s correctly: “Why are you getting paid 5 to 6% if you can’t figure that out?” Khan asked.
  • “When the stock doubles for a very high large market cap company, clearly something didn’t work right here,” he added.
  • Shares of both Airbnb and DoorDash skyrocketed after their public debuts.
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Imran Khan told CNBC on Tuesday that the recent post-IPO stock pops including those of Airbnb and DoorDash represent an “epic level of incompetency” from the bankers who underwrote the stocks. 

The former banker who led Alibaba’s IPO in 2014 said that it’s the bankers job to understand the market and price the IPO’s correctly. Right now, bankers could be doing a “much better job,” said Khan. Airbnb leaped 115% on its first day of trading-its IPO offering price was $68, but it went on to hit an intraday high of $165. Meanwhile, DoorDash opened at $182 on its public debut, 78% above its initial-public-offering price of $102.

Khan also said that DoorDash and Airbnb were not obscure companies, and that bankers should have known better.

“Why are you getting paid 5 to 6% if you can’t figure that out?” Khan asked.

Read more:A JPMorgan income fund manager shares 12 high-dividend stocks set to gain from a broad cyclical recovery – and unpacks the strategy he uses to beat 93% of his peers

“When the stock doubles for a very high large market cap company, clearly something didn’t work right here,” he added. 

Khan was also the chief strategy officer of Snapchat during its 2017 IPO. SNAP gained as much as 52% on its first day of public trading.

The Verishop founder and CEO said that these that these stock pops are causing investors to lose confidence in the IPO process. He doesn’t think the system of bringing companies to market is broken, but he said bankers could perform better.

“I think when the market gets really busy, a lot of the times bankers get really focused on chasing deals and client management, as opposed to doing their job,” said Khan. 

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