IPO Burden
“IPO Burden”– a cartoon that illustrates the problems tech companies are currently facing as they go IPO.
Being publicly listed comes with many advantages, but it is also complex and costly.
In today’s market, it also comes with a significant risk, with many tech stocks having lost at least three-quarters of their value since peaking in late 2021, and some well-known names are down 90% or more (e.g. Robinhood, Peloton, Affirm).
For those on the trajectory to going public, many are having to consider significant valuation cuts.
For example, Oyo, a budget hotel booking company and one of the highest-valued startups in India, may knock its $1 billion IPO (and its intended $12 billion valuation) in half, due to factors like poor performance in the stock market.
Andreas Bernstorff, head of European equity capital markets at BNP Paribas remarked, “many investors are grappling with their portfolios turning negative and the rotation into value is depressing appetite for the growth stocks that dominated the IPO market last year.”
