The number of IPOs has picked up in recent years, but the market still lags well behind its pre-pandemic pace. What’s holding it back, and could blockbuster offerings like Circle (CRCL) help reignite investor interest?
Lukewarm IPO Market
As we head into late June, the IPO market remains tepid. Ongoing uncertainty around U.S. tariff policies, recession concerns, geopolitical tensions in the Middle East, and elevated interest rates have all weighed on activity.
Still, with the memory of the Liberation Day selloff starting to fade and the third quarter just ahead, conditions appear to be improving. If a few key developments fall into place, 2025 could shape up to be the strongest year for IPOs in four years.
Signs of Momentum
So far this year, we’ve seen 94 companies come public, raising $15.4 billion. That includes 42 IPOs in the second quarter, which raised $7.0 billion. Quick math shows that Q2 was slower than Q1, likely due to the challenges I mentioned earlier.
Still, the pace of IPOs this year implies ample potential to surpass the 150 IPOs that we saw in 2024, which was higher than the 109 in 2023.
It’s still not likely that we’ll get back into the range of 160-plus new issues that we saw each year between 2017 and 2021, but with a potential ceasefire between Isreal and Iran, a Fed that’s increasingly likely to cut in July or September and potential progress on tariffs there’s reasons to be optimistic that IPO market momentum is building.
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The following two charts from Renaissance Capital show what the trends in the IPO market look like.
Circle (CRCL): The Year’s Breakout IPO
While the overall IPO environment remains muted, standouts like Circle (CRCL) are making waves.
Shares of the digital currency platform have skyrocketed more than 675% from their IPO price, pushing its market cap close to $60 billion.
This explosive performance has been fueled by the Senate advancing the GENIUS Act, which lays out a regulatory framework for banks, fintech firms and large retailers issuing stablecoins, and tasks the Treasury Department with supervising them.
Circle’s big-picture goal is bold: to take what we think of as money and make it digital and available on the internet.
Its USDC stablecoin, pegged to the U.S. dollar, enables businesses to offer payment connectivity and dollar-backed financial services to more people in more places.
Fintech Heavyweights Drive Stablecoin Adoption
On Tuesday, fintech behemoth Fiserv (FI) announced plans to launch its own stablecoin (FIUSD) alongside a platform connecting clients with the 10,000+ financial institutions and millions of merchants that Fiserv works with worldwide.
The company’s stablecoin push, developed in collaboration with Circle, Solana, Paxos, and Mastercard (MA), is expected to roll out this year. The news sent shares of FI, and several small-cap regional banks, sharply higher.
Many small financial firms have struggled to keep up with the costs of evolving technology and see their deposits – which generate critical revenue as they are used to make loans – at risk if customers start to pull deposits and put them into stablecoins.
Having an easy way to participate in the stablecoin market through partners like Fiserv might help to reduce the risks of digital asset disruption for these smaller players.
A good, albeit somewhat illiquid, ETF to follow for small financials is the Invesco S&P SmallCap Financial ETF (PSCF).
Turning to Mastercard, news of the massive payments companies’ move into stablecoins may help to assuage investor concerns that its payment ecosystem, and that of Visa (V), is at risk of disruption from digital assets like stablecoins.
Should stablecoins and digital asset platforms like Fiserv’s be integrated across Mastercard products and services, then adoption and utility of the now-fringe financial assets could surge.
On the other hand, it may well be that the world’s largest fintech firms don’t see stablecoins as a market that they need to fully embrace but simply need to be involved in (or neutralize) to preserve their dominance.
IPO Spark?
One thing is certain here, Circle’s stock surge is lighting up investor interest – not just in stablecoins and fintech, but in the broader IPO market.
While other names like Chime Financial (CHYM) haven’t matched CRCL’s meteoric rise – CHYM rallied to nearly 45 on debut but now trades closer to 30, just above its 27 offer price – the excitement surrounding Circle may inspire more underwriters and early-stage investors to test the waters.
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