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Last week we wrote about how M&A activity has been low so far in 2024. The same applies to IPO activities. But this week brings two highly anticipated public debuts that could reignite hopes of a rebound in IPOs.
Astera Labs and Reddit go public
Astera Labs (ALAB), a semiconductor company that develops connectivity solutions to support AI and machine learning tasks, will go public on Wednesday, March 20.
The Intel-backed company will make its stock market debut by offering 17.8 million shares in a price range of $27 to $30, bringing IPO proceeds up to $534 million at a valuation of $5 billion.
This will be the first major semiconductor debut since Arm Holdings (ARM) in September. Speaking of ARM, the IPO lock-up period ended on Tuesday, March 13, ultimately leading to increased trading activity Since then, share prices have remained unchanged.
Reddit (RDDT) will make its long-awaited public debut on Thursday, March 21st. The debut offering will include 22 million shares in a price range of $31 to $34, for a total high-end raising of $715 million at a valuation of nearly $6.5 billion.
IPO activity has been low since the beginning of the year
Despite these two high-profile debuts, the year to date has been otherwise weak for initial public offerings, which are still facing headwinds from higher interest rates, making private companies reluctant to come to market.
There were only 34 IPOs in January and February, compared to a 5-year average of 93. So far in March, only NeOnc Technologies Holdings (NTHI) has filed for an IPO.
Source: Wall Street Horizon
looking ahead
The performance of Astera Labs and Reddit this week and in the weeks following their public debuts will likely impact how confident other private companies are about going public in 2024.
The glut of IPOs last year was due in part to the poorer-than-expected performance of many newly public companies.1 Poor business conditions led companies like Reddit to delay their IPO plans.
With interest rate cuts expected later this year and the ongoing soft landing2, this could be just the right recipe for a revival in IPO activity.
1 EY Global IPO Trends 2023, December 13, 2023
2 Semiannual Monetary Policy Report to Congress, Chairman Jerome Powell, March 6, 2024
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Editor's note: The summary bullet points for this article were selected by Seeking Alpha editors.
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