The IPO market has been relatively slow throughout 2016, but it’s predicted to stabilize — or even increase — in 2017.
Experts are saying that the upcoming presidential election, along with interest rates and some issues stemming from Brexit earlier this year, are to blame for the downturn in the initial public offering market.
The market is down 71% year over year. Only 11 companies went public during the first quarter of 2016, and overall, just 75 IPO deals have occurred throughout this year so far. Comparatively, by this time in 2015, 140 IPO deals had occurred.
However, industry professionals are predicting that 2017 will be much more stable, with unicorn IPOs debuting on the market. The term “unicorn” refers to a privately funded start-up company that’s valued at $1 billion or more. While 2017 won’t be a “boom” year for unicorn IPOs, their presence indicates a rising market overall.
Experts acknowledge that many benefits come with being a public company, including increased brand awareness and credibility. However, companies should be cautioned to have a great management and advisory teams, as well as fantastic rates of growth and profitability, before going public.
For instance, investors are anxiously awaiting the IPO of the app-based transportation company, Uber. The company has been fraught with controversies. They don’t provide driver background checks, they have an ongoing battle with drivers as to whether they should be classified as employees or independent contractors, and the service has even been banned in certain countries.
Despite the issues, Uber remains financially unaffected. Furthermore, its ability to raise enormous amounts of money in a short period of time has impressed venture capitalists, especially given the fact that the company is less than a decade old.
Although the company has been expected to go public for quite some time, whether or not an Uber will become an IPO in 2017 remains to be seen. If they do decide to go public within the next year, it could potentially mean huge things for both the company and for Wall Street as a whole. The market itself is poised for a comeback, but the nation will have to wait to see which IPOs appear within the next year.