'Go go go:' Bankers are telling startups to get their IPOs done fast
Chime
- The markets have relaxed after Trump's tariffs scare, and companies are racing to go public again.
- Startups like Chime and Hinge Health resumed their IPO plans this week after previous delays.
- Bankers are telling IPO hopefuls to capitalize on the market's stability β knowing it may not last.
IPOs are back βΒ just a month after a sudden market slump forced tech companies to put their public market debuts on hold.
This time, bankers are telling companies to rush out while they still can.
"If you're trying to get public, now is the time to 'go go go' before something else happens," a healthcare banker told Business Insider. The banker requested anonymity because they weren't authorized to speak to the press.
When President Donald Trump announced sweeping tariffs on imports from other countries on April 2, the markets panicked. The chaos forced companies from the payments lender Klarna to the physical therapy startup Hinge Health to put their long-awaited IPO plans on hold.
But in the past month, a number of changes, including Trump's rollbacks of the most severe tariffs and assurances he would not fire Federal Reserve Chair Jerome Powell, all but erased that market drop. The S&P 500 is now up about 1% since the beginning of the year, a nearly 19% increase from its April lows.
With IPOs on the table again, companies are hustling to complete those deals while the market stability holds.
EToro, the Israeli trading platform, made its public debut on Wednesday via a SPAC merger and saw its shares pop on the Nasdaq, opening 34% above the IPO price and valuing the company at nearly $5.2 billion by Friday. Hinge Health resumed its own IPO plans by kicking off its road show Tuesday, aiming for a valuation of up to $2.6 billion. Digital banking app Chime and diabetes care startup Omada Health also filed to go public in May.
The markets have bounced back quickly after Trump rolled back most tariffs in part because investor appetites didn't go away, said Tom Johnson, global cohead of capital markets at Barclays. (Barclays is an underwriter on Hinge Health and Omada Health's planned IPOs.) Companies are being encouraged to seize on that improvement, he said.
"Knowing that we're perhaps going to be living in a world with a bit more volatility, you've got to be thinking about going when you can," Johnson said.
Releasing pent-up IPO demand
Bankers are looking at a number of signals that suggest companies could see successful IPOs right now.
Most importantly, the volatility index has cooled, signaling calmer markets. VIX, a measure of market volatility often called the stock market's fear gauge, denotes high volatility at values of 30 or more, while values of 20 or below signal more stability. The VIX index hit painful highs of 52 on April 8. As of Friday, the index has dropped to 17.
That reduced volatility, combined with better market performance, has allowed public investors to stop playing defense with their existing portfolios and consider new buys.
With steadier supply chains for most industries and fewer market shocks, companies and investors are also finding it easier to agree on fair pricing, a key ingredient for a successful IPO.
"Boards are now talking about the IPO option as being attractive and something that they want to proactively seek," said Jimmy Williams, a senior banker at Jefferies who worked on the eToro deal. "The backlog of private companies waiting to go public right now is one of the longest we've ever seen because we've had such a historic drought the last three years."
Hinge Health
No guarantee of sunny skies ahead
Despite recent market improvements, Barclays' head of Americas equity capital markets, Robert Stowe, said it's reasonable to expect higher political volatility for the foreseeable future.
"The conversations are harder than they've been historically. It's harder to predict even the next day, let alone the two weeks you need for a typical IPO roadshow," he said.
Not all of the companies previously rumored to be on the precipice of IPOs have come back to market yet. As of May 15, online payments company Klarna and ticket marketplace StubHub, which both reportedly delayed their IPO plans in April due to the stock sell-off, haven't publicly reupped those efforts.
Neither has Medline, a surgical equipment company backed by private equity firms Blackstone and Carlyle, which said in December it had confidentially filed its S-1. Medline had been planning a spring 2025 IPO until Liberation Day tariffs forced an indefinite delay, per the Financial Times.
It's not clear yet which of these companies, if any, will resume their IPO efforts in the current market. Medline, for one, still stands to be significantly affected by the tariffs, since the company manufactures much of its supplies in China. Most imports from China now face a 30% tariff, at least for the next 90 days, while the US and China attempt to negotiate a long-term trade deal.
Spokespeople for Klarna and StubHub said the companies don't have any information to share on their IPO plans. Medline didn't respond to requests for comment for this story.
Private investors may not be able to take advantage of the market upswing by cashing out at a company's IPO, either. Insiders are frequently subject to lock-up periods, wherein investors have to wait from 90 and 180 days after the IPO to sell their shares, sometimes even longer. Given how much the market has fluctuated this year, investors can't be sure that shares will continue ticking up for the next six months.
Still, it may be worth it to get an exit on the books while the market fundamentals are favorable, particularly for mature companies like Omada Health founded more than a decade ago, and offer an opportunity for investors to get the returns they've been waiting for.
"There is more impetus to get the first deal done and get the company listed, give the stock a chance to trade, and then the owners can be more nimble with the balance that they're holding," Stowe said.
For other companies, especially those that could be more vulnerable to policy changes, bankers are advising a "wait and see" approach, watching how this next set of IPOs performs and continuing to evaluate emerging political risks, said Phil Capen, a managing director of equity capital markets at Deutsche Bank.
"The market is getting better, but there's still a lot of uncertainty out there. If you don't need to go, and you can be patient, I think there are a number of companies that are just waiting to find the right window," he said.
