Companies That Had Their IPO in 2023: Cautious Optimism

As the calendar flipped from 2022 to 2023, the financial landscape began to stir with a renewed sense of optimism. This burgeoning confidence among investors and market analysts was rooted in several trends and changes in the economic landscape, which in turn triggered a turnaround from the preceding year's challenges. Despite ongoing concerns, such as persistent inflation and geopolitical strains, the stock market displayed remarkable resilience and signs of recovery.

• Cautiously optimistic market: While 2022 had been tough for the markets, 2023 started off positive, and while some worries remained the overall sentiment was optimistic.

• Interest rates: Much of the market sentiment during the year was closely tied to monetary policies from central banks.

• IPO interest pick-up: The number of companies going public increased from the previous year, however, the interest in SPACs was still lukewarm at best.

Entering 2023, there was a budding sense of optimism among investors and market analysts. This optimism was not unfounded but was rather built upon several observations and trends that began to emerge more clearly. Despite the lingering concerns from 2022, the stock market started showing signs of recovery and resilience.

One of the key drivers of this positive shift was the market's adaptation to the new economic landscape shaped by higher interest rates and inflation. Investors and companies had started to adjust their expectations and strategies to navigate this environment more effectively. Additionally, there were indications that supply chain disruptions, a significant factor in the inflation surge, were beginning to ease. This improvement suggested potential relief on inflation pressures and a more stable environment for business operations and growth, positively influencing stock market sentiment.

Furthermore, geopolitical tensions, while still present, had been increasingly factored into market pricing. Economic indicators also pointed towards resilience across various sectors, with some regions and industries showing robust growth despite the broader challenges. This resilience was buoyed by continued innovation and technological advancements, particularly in the AI sector. However, the optimism was cautious. Investors remained wary of the persistent inflationary pressures and the potential for further geopolitical uncertainties. The stock market was largely affected by the central banks, as news about monetary policy updates (or lack thereof) caused volatility in the markets.

The AI hype in 2023 significantly influenced the stock market, reflecting a widespread enthusiasm for artificial intelligence technologies and their potential to revolutionize various industries. This excitement was driven by several key developments in AI, including breakthroughs in generative AI, machine learning advancements, and the implementation of AI in novel applications across sectors such as healthcare, finance, automotive, and entertainment. Companies specializing in AI or heavily investing in AI research and development saw their stock prices soar. Beyond companies directly associated with AI, businesses across various sectors that announced initiatives or investments in AI technologies also experienced a surge in stock prices, with the most striking of these being semiconductor companies.

In 2023, the markets witnessed a notable uptick in the number of companies opting to go public when compared to the previous year. This resurgence in IPOs was a reflection of improved market conditions, a more favorable regulatory backdrop, and a revitalization of investor interest and appetite for new opportunities following periods of market volatility and downturns.

Conversely, the interest in Special Purpose Acquisition Companies (SPACs) remained tepid throughout the same period. SPACs, offering an alternative route to the traditional IPO process by enabling companies to go public through a merger with these "blank check" companies, had experienced a surge in popularity in the preceding years. This waning interest can be attributed to a variety of reasons, including heightened regulatory scrutiny and changes that introduced additional complexities and challenges to SPAC transactions. Additionally, the mixed performance of SPACs post-merger contributed to investor caution, leading to a preference for the more traditional, and arguably more predictable, IPO route. The lukewarm reception to SPACs from investors during the year also showed a shift in sentiment towards more stable and conventional investment avenues, particularly in a market that was on the path to recovery from previous instabilities.

The biggest, and by far the most talked about IPO of the year, was that of Arm Holdings. The semiconductor company, whose products are used in essentially all smartphones produced worldwide, completed its IPO in September of 2023. While the reception was lukewarm at first, the company saw its share price nearly double during the first six months of trading.

However, this was not the first time that Arm had been publicly traded. The company, which was founded in 1990, was listed on the London Stock Exchange and the Nasdaq in 1998. In 2016, the Japanese company Softbank bought out the company and took it public. After NVIDIA tried to buy the company but was stopped due to anti-regulatory concerns, Arm went public again.

Further reading: ARM's Smartphone Monopoly: Setting the Stage for its IPO

The iconic German sandalmaker Birkenstock went public in 2023. While the company is based in Germany, it elected to list its shares on the NYSE.

Further Reading: Two And a Half Centuries of Sandal-Making: Birkenstock is Going Public

The marketing automation company Klaviyo went public in the fall of 2023.

The fast-casual Greek dining restaurant Cava Restaurants had its IPO in 2023. It is the largest restaurant chain offering Mediterranean food in the U.S. and has continued to expand after going public.

Nextracker, which is one of the largest solar panel tracker companies in the U.S., went public in 2023.

Instacart (Maplebear) was one of the most anticipated IPOs of 2023 and was listed on the Nasdaq in September.

The AI-driven beauty company Oddity Tech was listed on the Nasdaq during the summer of 2023.

All in all, the market sentiment and IPO landscape in 2023 is one that can be summarized as relatively optimistic when compared to the previous year. While the mood was far from euphoric, which had been the case for large parts of 2020 and 2021, the sentiment had stabilized and signs of positive things to come were starting to rear their heads. IPO activity picked up significantly, while SPACs for most intents and purposes had fallen out of favor with both investors and companies looking to go public.