After two tough years for U.S. IPOs, Donald Trump’s election victory could offer a glimmer of hope for a market resurgence. Following the win, major investment banks like Morgan Stanley, Goldman Sachs, JPMorgan, and Jefferies have all seen stock rallies exceeding 10%, signaling a renewed investor appetite that may help reopen the IPO window.
A significant rally in funds like the Destiny Tech100, which invests in high-growth companies such as SpaceX, OpenAI, and Stripe, further underscores growing optimism that IPO activity could see a strong rebound. Jay Ritter, a professor at the University of Florida Warrington College of Business specializing in IPOs, shares this sentiment. “I certainly expect that there will be increased IPO activity in the US during the next year, barring a big stock market drop,” he told Yahoo Finance.
The IPO market enjoyed a record boom in 2021 with over 1,000 public offerings, but rising interest rates caused activity to drop sharply to 179 IPOs in 2022 and 148 last year. This year, IPOs have ticked up to 193, suggesting the market is recovering, though it remains below the decade’s average of 290 IPOs per year.
Ritter believes that the current stock market surge following Trump’s election victory, rather than his specific policies, is more likely to drive IPO growth. While Trump is expected to support lower corporate taxes and deregulation, Ritter explains that major regulatory acts like the Sarbanes-Oxley Act of 2002 and the 2012 JOBS Act ultimately had “pretty minor” effects on IPOs. “The much more important issue is what happens to the stock market,” Ritter added.
Since Trump’s Nov. 6 election, the S&P 500 has climbed over 3.5%, while the Dow Jones and Nasdaq Composite have each risen by more than 4%, reflecting an enduring rally that experts believe could buoy IPO prospects into 2025.
Goldman Sachs strategists, led by David Kostin, also see signs of a favorable IPO climate. Goldman’s “IPO Issuance Barometer,” which factors in S&P 500 trends, CEO confidence, and interest rates, currently sits at 137, indicating strong conditions for IPOs. The barometer’s baseline score of 100 aligns with the typical historical pace of IPOs.
This momentum may spur companies like Klarna, the Swedish fintech giant, to seize the opportunity. After reaching a $40 billion valuation in 2021 only to fall below $10 billion a year later, Klarna has reportedly filed confidentially for an IPO, as the Wall Street Journal reported on Wednesday.
As market conditions align, companies aiming to provide an exit strategy for early investors may be incentivized to take advantage of the IPO resurgence that Trump’s win could accelerate.
