IPO Market Starts to Warm After Slow Start to 2025

The initial public offerings (IPO) market began 2025 with its slowest start in five years, but a flurry of offerings in recent weeks may indicate that the winter freeze may finally be thawing ahead of summer. The calendar recently featured several high-profile rallies in stocks making their Wall Street debut, including a nearly 170% day-one return for shares of Circle Internet Group (CRCL), a stablecoin issuer. This followed a 300% surge for shares of AI company CoreWeave (CRWV) since its IPO in March.

Another hot new stock was Omada Health (OMDA), which made its market debut in June. While Omada didn't shine as brightly as Circle and CoreWeave, it still enjoyed a hearty Wall Street welcome, rising 21% on day one. Performance software TV company MNTN (MNTN) also had a strong IPO performance in late May. And on June 11, defense and space firm Voyager Technologies (VOYG) kept the string of wins going as its shares doubled on their first trading day to a $3.8 billion valuation.

IPOs retreated overall during the last few years amid high interest rates, a growing private equity market, and the market's tariff-related pullback this April. While IPOs aren't typically traded by long-term investors, a surfeit of IPO activity—as seen from 2017–2021—often reflects investor and corporate optimism.

That optimism often stems from solid underlying market conditions that suggest potential opportunities to raise money in the market through new public offerings. And when IPOs do well on their first days of trading, it sometimes translates into better market performance across the spectrum, at least for the highest-profile debuts.

"Whether or not an investor is participating in an IPO shouldn't impact whether they should monitor their performance, as successful IPOs can help set the tone for the entire market," said Alex Coffey, senior trading and derivatives strategist at Schwab.

When IPO activity falters, as it did in the last few years, it can reflect overall market caution and is worth at least a bit of attention, even from people who'd never consider trading an IPO. 

Most IPO shares are typically scooped up by institutional investors. Brokerages then divvy up the rest to retail investors. Initial trading days can offer strong performance but can be volatile, and some IPOs tank. Those able to buy shares at a company's initial price may have a chance of making a good bit of money. But as with anything stock-related, the greater the potential reward, the greater the risk.

There have been 84 IPOs in the U.S. this year through mid-June, according to Renaissance Capital, down from 150 in the same period of 2024 and 109 in 2023. It was the lowest number for the period since 2022, when just 71 IPOs took place, and down from 2021's peak of 397.

Proceeds raised by IPOs in 2025, with only a few trading days left before the halfway point, also lagged at just $13 billion—also the lowest since 2022. That's less than 10% of the roughly $140 billion raised in the record year of 2021 through the same date.

"Concerns about persistent inflation and uncertainty around tariff policies" interrupted the typical March pick-up in IPO activity, Renaissance said in an April press release.

And performance of the handful of $100 million IPOs that did occur was poor, with an average loss of 1% on a return from offer basis. Health care IPOs led in terms of first-quarter new offerings.

The tide appeared to shift slightly from April through mid-June amid the aforementioned rallies by Circle, CoreWeave, and Omada. Back in April, Renaissance said filing activity and private company news suggested that "issuers are still cautiously optimistic about the coming year."

By mid-June, the firm took a different tack, noting in a report: "We haven't seen this type of energy in the IPO market for a long time."

The Circle IPO, Renaissance noted, broke the record for biggest first-day jump by an IPO valued at $1 billion or more. "No doubt, every pre-IPO crypto company was on the phone with their bankers this week," Renaissance said. In fact, crypto exchange Gemini issued a release saying it had filed confidentially for an IPO.

While AI and crypto companies seem primed for more IPO activity, one question Wall Street's asking is whether that will translate into additional IPO activity in other sectors. It's not clear it will, and one reason could be the popularity of private markets. As Barron's recently noted, the number of operating public companies in the U.S. has fallen to 4,000 from 8,000 since 1996.

Despite competition from the private market, continuing uncertainty related to tariffs, and the U.S. federal budget, several possible IPOs loom that might be worth watching to see if the IPO market's spring fling with new offerings can last. Note that the potential offerings below are currently being chatted about behind the scenes but are not guaranteed to happen.

They include:

• Stripe: A payment processing company with an estimated $65 billion valuation.
• Databricks: A data analytics and cloud platform company valued at $43 billion.
• Klarna: A Swedish fintech company specializing in buy-now-pay-later services valued at $15 billion.