“Robinhood might pave the way for a more active IPO market in the second half of the year,” said Phil Haslett, co-founder and chief revenue officer of EquityZen, a firm that lets investors and employees of private companies sell shares before they trade on Wall Street.
The class of 2021 IPOs have collectively raised about $80 billion so far as well, a surge of nearly 250% from this time last year and up sharply from the $30 billion raised by IPOs in the first six months of 2019.
More direct listings and SPACs on the horizon
Experts say that more companies will consider selling existing shares directly to investors, as Coinbase and Roblox did, instead of offering new stock the old-fashioned way with an IPO.
Blank check mergers with special purpose acquisition companies, or SPACs, are likely to remain popular as well. That’s how SoFi, Clover Health and Hims & Hers Health went public this year.
“The range of ways to go public has changed forever,” said Kelly Rodriques, CEO of Forge, another company that lets people sell shares of private companies. “There is more flexibility now with direct listings and SPACs.”
SPACs in particular often allow private companies to raise more money than a regular stock sale. Merging with an already existing public firm also can help give a private company instant credibility on Wall Street.
“The sheer volume and size of the deal would have been more challenging as an IPO,” Scholl said. “But it allowed us to reduce our debt and accelerate our growth agenda.”
IPOs not going away anytime soon
But not all companies think that the traditional IPO is dead.
“We considered alternatives like a SPAC or direct listing, but an IPO was a fantastic marketing event as well as a good financial one,” he said.
An IPO can also make it easier for some companies to allow customers and employees to get shares before the company begins trading.
That meant they could enjoy the gains after Doximity doubled on its first day or trading.
“We’re all about physicians first. It drives everything we do and the more than 10,000 members who got the stock at the offering price are pleased with the performance,” Tangney said.
So while some startups are shunning the traditional IPO process in favor of a SPAC or direct listing, the IPO market is still here to stay.
Almost. There’s one notable way the second half of 2021 might look different for IPOs.
“We’re watching China carefully,” said Forge’s Rodriques. “It’s still too soon to tell what’s next, but as more global unicorns emerge, they can be a boon for their local economies.”
One possibility: more Chinese companies may choose to go public in Hong Kong instead of New York.