IPOs Ain’t What They Used To Be
(Source is on Codeberg.)
To show the new data loaders, we’ll process this table that Jay Ritter maintains (URL is in the captions):
We’ll need to read the PDF from the URL, convert it to text, and do some regex surgery.
I’d use a more sophisticated library/method if it was gnarlier.
Using Python since it is likely the path of least resistance.
Let’s see what the number of IPOs per-year has been like…
What about first-day returnperformance?
2020’s spike (26.2% median first-day return): The 2020 spike (26.2% median first-day return) was an artefact of the pandemic:
- Massive retail investor participation fueled by stimulus money and commission-free trading apps
- Extremely low interest rates making risk assets more attractive
- Stay-at-home trends boosting tech IPOs (which dominated that year)
- Supply chain disruptions creating scarcity of good IPO opportunities
- SPAC mania contributing to overall IPO market exuberance
- Companies like Snowflake, Palantir, and DoorDash saw enormous first-day pops
The 2023 -0.5% median return reflected a full-on reversal of market conditions:
- Rising interest rates making risk-free alternatives more attractive
- Inflation concerns and economic uncertainty
- Tech sector correction after years of overvaluation
- More realistic IPO pricing as markets became more disciplined
- Reduced retail speculation compared to 2020-2021
- Companies and underwriters learned to price more conservatively after the previous bubble
That swing from +26.2% to -0.5% was one of the most dramatic shifts in IPO market sentiment in decades. It shows how the “money left on the table” phenomenon can completely reverse when market conditions change — from severe underpricing in super-active markets to more efficient (or even slightly overpriced) offerings in cautious ones.