Wall Street Gives Lukewarm Reception to New Tech IPOs
After a long drought, Arm, Instacart, and Klaviyo finally go public but struggle to maintain their initial trading pops. The underwhelming performances leave other startups with little incentive to rush into the market.
The tech IPO market finally reopens after a 21-month freeze, but Wall Street shows little sustained enthusiasm for the new batch of public companies. Chip designer Arm, grocery-delivery app Instacart, and cloud software vendor Klaviyo all debut within days of each other, yet they share a similar pattern of early excitement followed by swift declines.
Investors who buy shares at the IPO price see modest gains if they sell immediately, but almost everyone else ends up in the red. Arm drops steadily after a strong first day to hover just above its offering price, while Instacart and Klaviyo experience similar post-pop sell-offs that wipe out most of their initial momentum.
These lukewarm reactions highlight ongoing concerns about tech valuations in a high-interest-rate environment. However, experts predict the IPO market will open up further in early 2024 as private equity funds seek exits and employees demand liquidity, eventually forcing well-capitalized startups to take the public plunge.