John Jannarone, editor-in-chief at IPO Edge, joins Cheddar News to discuss the state of IPOs going into 2023 after listings faced their biggest slump since the 2008 financial crisis. 

John Jannarone, editor-in-chief at IPO Edge, joins Cheddar News to discuss the state of IPOs going into 2023 after listings faced their biggest slump since the 2008 financial crisis.&nbsp;

IPO Outlook for 2023 After 2022's Listing Drought

So joining me now is john gennaro an editor in chief at I. P. O. Edge john it's great to see you and what is the outlook for the I. P. O. Market in 2023. Thanks chris it's good to see you too. Good to be back. Um Well you know as I think everyone knows this has been one of the worst I. P. O. Years we've seen in a long time. Um But you know, going into this year there were great you know, high hopes for a lot of companies to to raise money either through regular way I. P. O. Or a SPAC. Virtually none of that's happened. There's a backlog there and the bankers and other advisors, I talked to tell me that you know there are plenty of companies waiting in the wings but they're in a holding pattern, they're a couple of reasons. One is that you know, as you just pointed out looking at the NASDAQ today the mark that hasn't stopped falling. And kristen really companies don't like to go public when the market, you know isn't a negative trend like that because it just kind of feels like you're gonna have a really tough time having aftermarket performance work out for you. Um And of course a lot of these companies don't want to raise money at these levels either. Unfortunately some some of them need it and if they want a big enough check they're probably gonna have to consider the I. P. O. Route. Um So we can talk about some of the companies um you know that might might go forward next year And some of the things that I've noticed if we look at Fintech especially is they're doing things to clean clean up their business models. They're they're they're firing people cutting other overhead to make more clear to investors that they care about profitability because in this kind of market you're gonna have a really tough time going out. Just the pure sales growth story. Yeah well let's talk about some of those companies john because despite what's been obviously a really rough year for the market the overall stock market in 2022 concerns of more pressure at least in the front half of 2023. I do think investors are expecting some companies like an Instacart for instance potentially to I. P. O. And some other names as well. What's on your radar in terms of what might be in the pipeline some of these companies that might make a debut to raise capital in 2023. Well let me break break them into a couple of categories. I want to talk about Fintech but first you know you just talked about some of these clean energy companies that to me is something that I'm hearing from advisers that is really going to work. I mean there are all kinds of reasons why this shift towards green energy must happen. There are government mandates their pledges from companies and so on. So those probably have a good chance especially if they're profitable are very close. But some of the sexier names, I think I want to talk about are things like stripe chime and plaid, you know, they're all firing people as I mentioned to reduce headcount and you know, I think stripe came out the other day and um, you know, senior management was explaining that, you know, they were just too optimistic about where things were going. In the wake of Covid, it looked like this growth in online spending was going to just keep climbing higher and higher, but then things got messy, right? We had interest rate hikes, we got supply chain problems. Um, and of course Covid, you know, fingers crossed his has, you know, has moved past us and so you know, patterns have changed a little bit. So I think that those companies are trying to clean themselves up and they could go public, I think something like stripe really is a true unicorn, it could be a must have to some investors. So you know, the other piece of this of course though is that, you know, stripe was valued at $95 billion and maybe it's worth half that right now based on what some analysts are saying. So you know, it's a couple of things that need to happen in order for these deals to get done right. So inflation obviously john we know kind of the impetus dragging down the stock market because higher rates which are basically directly dragging down the stock market rising of course because of inflation, are there any other factors at play here that do make it a tough market for I. P. O. S. Well, I think it's general volatility as well. Um you know, when you have these days um you know when the vix is spiking so much, you know that the bankers who underwrite these deals really don't like to see that. So you need the market to stabilize. I would say, I mean even if rates keep going up, you know, if if the market is able to, you know, feel like it's bottomed out a little bit. I mean, I think that could go that can go a really long way. Um You know, another thing is some of these companies are just gonna have to um you know, realize that it could be quite a long time before they command the valuations they once did and they're gonna have to accept that they're not worth as much as they were. Um You know, the other alternatives of course, or try to get debt financing or more private financing, but in some cases, especially if it's a larger company, you can't get a check that's the size you need to keep growing from private investors and so you've got to look to public markets so eventually I think you're gonna have rationality prevail. Um You know, I want to talk about something that's a good example of this Mobileye which you and I discussed last time I was on price did a very, very fair valuation and its rallied strongly in a down market in the last couple of months. So you'll see companies like that go out and say, look, we realize that you know, this is reality and if we're gonna if we're gonna want to go out and go public, we're gonna have to accept a lower valuation. So I think it's a mix of those factors. All right, john john Arone editor in chief of I. P. O. Edge, john it's great to see you and happy holidays.