Inflation Fears Prompt Investors To Move Away From IPOs

Volatility in the stock market has driven a wedge in the initial public offering (IPO) market, which was surging until recently, The Wall Street Journal (WSJ) reported.

Some investors think next week could be a turning point, with the possibility of a calmer stock market and the IPOs coming up for Oatly Group, a Swedish oat milk maker, and software company Squarespace, according to the report.

Meanwhile, the shares of quickly growing companies have hit a wall, with investors not interested in shares for some companies. Other companies have postponed their IPOs due to the market volatility. WSJ reported that the S&P 500 has recently had its “biggest three-day swoon” in almost seven months.

An IPO market that is robust and doing well, according to WSJ, will be instrumental in determining how the rest of the year goes, as there are some big potential debuts set for later in 2021, including those of brokerage app Robinhood and delivery app Instacart.

There will also be a continuing focus on special purpose acquisition companies (SPACs), WSJ reported. Hundreds of them are slated to go forward with mergers with private companies. The companies collectively manage over $100 billion.

But that could be jeopardized due to the market conditions, including the fact that many investors are skeptical of participating in deals, according to WSJ.

PYMNTS reported on the juxtaposition of conditions last week, with the IPO market seeing record-number highs for both money raised and shares sold.

At the same time, volatility caused some IPOs to be shelved, including ones from Hear.com and Enact Holdings, which is a subsidiary of Genworth Financial.

There have also been numerous companies with shares falling below their IPO prices, including Bumble, Honest, Affirm and Coupang.