TLDR
- Trump’s victory coincides with 10%+ rally in investment banking stocks
- IPO market shows signs of recovery with 193 IPOs in 2024, highest since 2021
- Republicans secure House majority, giving Trump unified control
- Stock market rallies over 3.5% post-election across major indices
- Klarna confidentially files for IPO despite previous valuation challenges
The IPO market is showing new signs of life following Donald Trump’s election victory, with investment banking stocks rallying and market conditions suggesting a potential revival in public offerings. This comes after two years of subdued IPO activity that saw numbers fall well below historical averages.
Investment banking leaders have experienced notable gains since Trump’s election win last week. Morgan Stanley, Goldman Sachs, JPMorgan, and Jefferies have all seen their stock prices increase by more than 10%. This surge indicates growing investor confidence in the potential for increased deal-making activity.
The broader market has responded positively to the election results, with the S&P 500 rising more than 3.5% since November 6. The Dow Jones Industrial Average and Nasdaq Composite have shown even stronger performance, each gaining over 4% in the same period.
IPO volumes tell a story of gradual recovery. While 2021 saw more than 1,000 companies go public, the numbers dropped dramatically to 179 in 2022 and 148 in 2023. However, 2024 has already recorded 193 IPOs, marking the highest total since the 2021 boom, though still below the decade’s average of 290 per year.
The Destiny Tech100 fund, which invests in private companies like SpaceX, OpenAI, and Stripe, has also seen substantial gains. This movement suggests investors are anticipating increased opportunities in the private-to-public transition space.
University of Florida professor Jay Ritter, an IPO expert, notes that the market’s response to Trump’s victory, rather than potential policy changes, may be the primary driver of increased IPO activity. Historical examples show that legislative changes have had minimal impact on IPO markets compared to overall stock market performance.
Evercore ISI’s Julian Emanuel presents an optimistic outlook, projecting the S&P 500 could reach 6,600 by June 2025. Emanuel suggests that artificial intelligence developments could fuel this growth, potentially making IPOs a central feature of market activity.
Goldman Sachs maintains its own IPO Issuance Barometer, currently reading 137 against a historical baseline of 100. This elevated reading stems from the S&P 500’s strong performance and high valuation multiples, suggesting favorable conditions for new listings.
The political landscape has shifted substantially with Republicans securing control of the House, completing a trifecta of Republican control alongside the Senate and presidency. This unified government structure could influence market dynamics and regulatory environments.
In the corporate world, real movement is already visible. Klarna, the Swedish fintech company, has confidentially filed for an IPO, despite experiencing dramatic valuation changes from over $40 billion in 2021 to under $10 billion a year later.
The Republican House majority, though narrow, removes certain political uncertainties. Speaker Mike Johnson has received Trump’s endorsement to retain his leadership position, suggesting stability in House leadership.
Market experts note that private equity and venture capital firms may need to adjust their valuation expectations. The elevated valuations of 2021 appear unlikely to return soon, potentially pushing companies to accept current market conditions for public offerings.
The House Republican victory has broader implications beyond market dynamics. The party’s control limits potential investigations into Trump’s actions and may influence policies on issues ranging from tax provisions to immigration controls.
Republican control also affects fiscal policy outlook. With Trump returning to the White House and Republicans holding both chambers of Congress, previous priorities regarding budget deficits and government debt may shift.
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