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  • Writer's pictureJohn Pickart


Last year was a record for initial public offerings (IPOs). The U.S. market saw 309 traditional IPOs from operating companies plus another 628 from closed-end funds, SPACS, and REITS.

Although the number of just traditional IPOs (blue bar) was not a record, the $118 billion raised crushed the previous record of $65 billion in 2000 (black line). Start-ups now have access to a wide variety of capital, allowing them to delay going public. By the time they do go public, their valuations may be much larger than those in earlier decades.

Some have huge market capitalizations on the first day of trading. For instance, Rivian Automotive, the EV platform, raised $12 billion in its IPO and had a market cap of $70 billion at the IPO price. Of note is the lack of profitability of many IPOs, including Rivian. During 2021, 76% of the IPOs were unprofitable. This is similar the 81% in 2000. However, only 49% of IPOs in the following year were unprofitable.

SPACs were in the headlines for much of 2020 and 2021 (orange bar). Of the 628 fund-raisings last year, 613 were SPACs. These "blank check companies" raise capital in anticipation of eventually acquiring or merging with an existing operating company. The high level of traditional IPOs and SPACs reflected investor exuberance, similar to previous periods. Trade accordingly.

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