Companies That Had Their IPO in 1990: The Recession Kicks Off

In 1990, the financial markets and the IPO landscape were significantly influenced by the economic conditions prevailing at the time, notably the onset of a recession that impacted global economies. The year marked a challenging period for both equity markets and companies aspiring to go public, as investor confidence wavered in the face of economic uncertainties. While the early '90s recession was brief and relatively mild when compared to other economic downturns, it still impacted the stock market and the willingness of companies to go public.

• The recession: The early 90s recession officially began in the summer of 1990, impacting both the stock market and IPO landscape.

• A slowdown in the IPO market: The recession made companies cautious about conducting IPOs.

• Geopolitical uncertainty: Iraq’s invasion of Kuwait and the imminent coalition response had a significant impact on the markets.

The early 1990s recession was a brief, but impactful economic downturn that affected the global economy, with notable impacts in North America, Europe, and Australia. It was caused by a slowdown in economic activity, high unemployment rates, and a decline in consumer and business spending. The recession officially began in July 1990 and ended in March 1991 in the United States and was most felt during those nine months, though its effects lingered for several years.

Naturally, the recession and general economic climate were not conducive for companies looking to conduct public offerings. The year marked a challenging period for both equity markets and companies aspiring to go public, as investor confidence wavered in the face of economic uncertainties. The recession, characterized by a decline in consumer spending, an increase in unemployment rates, and tightening credit conditions, played a pivotal role in shaping the investment climate.

The stock market during this period was volatile, with prices reflecting the economic downturn and investors becoming increasingly risk-averse. This environment proved particularly challenging for the IPO market, which saw a marked decline in activity. Companies looking to raise capital through public offerings faced a hesitant investor base, reluctant to commit capital amid the recession's uncertainties. This hesitancy was compounded by the performance of the broader stock market, where the volatility led to cautious trading behaviors.

The recession's impact on the IPO landscape was multifaceted. On one hand, it led to a reduction in the number of companies able to successfully launch IPOs, as market conditions were not conducive to the high valuations and investor interest that characterized more buoyant economic times. On the other hand, for the companies that did manage to go public, the market conditions necessitated more conservative pricing strategies, often resulting in lower than anticipated capital raised.

Iraq’s invasion and subsequent occupation of Kuwait had a profound impact on global geopolitics and financial markets, particularly the stock markets. This conflict not only reshaped the geopolitical landscape of the Middle East but also had far-reaching effects on the global economy and the stock markets due to several key factors, including oil supply concerns, regional instability, and the involvement of international forces. While the coalition spearheaded by the U.S. would not involve boots on the ground until the following year, Iraq’s invasion immediately had a significant impact on the global economy.

One of the immediate impacts of the invasion was the disruption of oil supplies. Iraq and Kuwait were significant oil producers, and the war led to fears of a substantial decrease in oil availability. This concern caused oil prices to spike, which in turn had an inflationary effect on global economies. Higher oil prices meant increased costs for businesses, especially those dependent on oil for production and transportation, leading to higher prices for goods and services worldwide. This coupled with the other causes for the recession led to a very skittish and negative sentiment on the markets, which also spilled over into the IPO landscape.

Cisco was one of the most anticipated IPOs of 1990, and the company seemed largely unphased by the recession at the time. In its first decade on the market, the company recorded a somewhat unbelievable gain of roughly ​​30,000%, but the good times were not to last. While Cisco was the most valuable company in the world for a time, it was hit incredibly hard by the dot-com bubble bursting and between 2000 and 2001 it saw the price of its stock decline nearly 80% from its all-time highs.

The American semiconductor company Xilinx had its IPO in 1990. Today the company has been acquired and subsequently phased out by AMD, and all its former products are marketed under the AMD brand.

Further reading: Lisa Su: Transforming AMD and Shaping the Semiconductor Industry

The contract manufacturing firm Benchmark Electronics had its IPO in 1990.

Monster Beverage, which is the company producing the energy drink with the same name, went public in 1990. It has been one of the best-performing stocks globally since its IPO.

Further reading: The Monster Beverage Success Story: Unleashing the Beast

The recession of the early 1990s had a profound impact on the IPO market, making companies cautious about going public. The combination of economic uncertainty, market volatility, reduced access to capital, and the long-term responsibilities associated with being a public entity contributed to a slowdown in IPO activity. Companies weighing the decision to launch an IPO had to carefully consider these factors against the backdrop of a challenging economic environment.