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What 2019 IPOs vs. 2018 IPOs Tell You About the Trend

by Bob Stokes
Updated: November 07, 2019

Back in July 2007, EWI's analysts were saying that the potential for a major stock market decline was "extraordinarily high."

They explained why: The housing sector was in meltdown, valuations were extended, the stock market's upside momentum was waning, investor optimism was high relative to historic norms, precious metals prices were falling and the CRB commodities index was lagging.

Our July 2007 Global Market Perspective also mentioned another factor:

Last Friday's Blackstone Group IPO shows further dissipation of the market's "animal spirits." It was met with immediate selling pressure.... This telling rejection of a key element of the financial engineering craze is yet another sign that the great financial flameout is nigh.

Nigh, indeed. Just three months later, the DJIA topped and went on to surrender more than half of its value through early March 2009.

What does this have to do with 2019?

Well, read this Oct. 31 article excerpt from Reuters:

Even after Lyft beat, Wall Street pummels former unicorns

Wall Street pummeled shares of companies including Pinterest, Lyft, Uber Technologies and SmileDirectClub on [Oct. 31] as investors grew more sour on money-losing former startups that went public this year.

As you probably know, a "unicorn" is an initial public offering with a valuation of $1 billion or more.

But, IPO troubles are not just confined to the U.S.

Our October Global Market Perspective showed this chart and said:

StartUpsStartDown

According to the latest global figures for 2019 IPOs, 845 companies raised $116 billion. Both figures are down about 25% from the same period in 2018.... This chart shows that global IPOs are leading the decline, as the Renaissance International IPO Index of non-U.S. companies peaked in January 2018.

Yet, keep in mind that the lack of animal spirits for global IPOs is just one factor that our global analysts are reviewing.

Several other warning signs are starting to appear in many of the 40+ markets that EWI covers worldwide.

Learn why as you review our coverage of global financial markets, risk-free.

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