By Adam Levine

The market for initial public markets has basically been frozen for three years. And CoreWeave's recent IPO has done nothing to change the dynamic, suggesting 2025 could be another IPO bust.

There hasn't been a good market for IPOs since 2021, when 311 companies listed, according to Jay Ritter of the University of Florida Warrington College of Business. The following three years saw a total of 164 listings.

Investment bankers had been hopeful 2025 would turn things around. That's looking less likely. If a small batch of first-quarter tech IPOs is any indication, start-ups may continue to hold off on public listings, waiting for a better environment.

"I'd probably not go now," Samuel Kerr, head of equity capital markets at Mergermarket, says. "There's an old adage that very good companies can list in whatever market. And that's absolutely true, but you wouldn't choose to list in this market."

The risk of waiting is that things get worse from here. "In the beginning of 2000, the internet bubble was going on, all sorts of companies were going public at sky high valuations, and then all of a sudden the music stopped," Ritter says. "Companies that were in the process of going public decided to wait, and valuations kept on dropping, and a lot of them went out of business. They never did tap the public markets."

The first tech IPO this year was cybersecurity firm SailPoint, which listed in mid-February, just days before the Nasdaq Composite's 2025 peak. SailPoint shares were offered at $23, the top end of the range in its prospectus. SailPoint stock was up 12% in its first two days of trading, but since then they have fallen 29% from their peak and 18% from the offering price.

SailPoint is a 20-year old firm that has struggled to make a regular profit.

Seven weeks later, AI cloud firm CoreWeave -- with a mountain of debt -- went public in a much more difficult environment.

Originally slated for a price range of $47 to $51 per share, CoreWeave management settled for an offering price of $40, and shares closed the day unchanged. In its first full day of trading on Monday, the stock fell 7.3% to $37.08.

"I've been doing this for 25 years, and I have never seen a market with this many great companies waiting to go out," says Louis Lehot, a lawyer at Foley & Lardner, who advises start-ups. He thinks there is too much macroeconomic uncertainty and that investors aren't looking to stick their necks out.

"This is absolutely a buyer's market," Mergermarket's Kerr said. "Sensitivity to risk is incredibly high and that needs to now be fully reflected in any IPO."

Another test of the 2025 IPO market may be coming soon: Cerebras, a fast-growing but unprofitable AI chip company, has filed paperwork to go public.

Write to Adam Levine at adam.levine@barrons.com

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March 31, 2025 16:29 ET (20:29 GMT)

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