Nasdaq, the exchange where many companies sell their stocks, is likely to do better than the New York Stock Exchange (NYSE) in getting new companies to list their stocks for the sixth year in a row in 2024. This year, companies raised about $22 billion from 160 initial public offerings (IPOs) at Nasdaq, while NYSE attracted nearly $17 billion from just 34 IPOs, according to figures from Dealogic and Nasdaq. This is the highest number of new listings in three years.
People in the finance world are feeling hopeful about IPOs because many companies want to go public. The recent rise in interest rates by the Federal Reserve has made it harder for companies to raise money, but many believe the situation will improve in 2025. Investors are excited that Donald Trump, who is expected to become president again, might make changes to rules that help businesses.
Jeff Thomas, Nasdaq’s head of listings, said he thinks this is a great time for IPOs and that they are actively talking to companies about going public in the early part of next year. Both Nasdaq and NYSE compete hard to attract new listings, and both are popular choices for global companies.
The strong performance of U.S. stocks has made investors more confident. The S&P 500 index is up nearly 27% this year, while the Nasdaq Composite has risen about 33%. This year, notable companies like Lineage, Waystar, and Astera Labs made their stock market debuts on Nasdaq.
Nasdaq also had 44 special purpose acquisition company (SPAC) IPOs, which is pretty normal for them. They even attracted big-name companies like Palantir Technologies and Campbell from the NYSE.
However, NYSE says they focus on the quality of the companies listed, not just the number of deals. They pointed out that 62% of the IPOs on Nasdaq this year wouldn’t have been good enough for their exchange and highlighted that they added over $400 billion in market value this year.
In the first half of 2024, NYSE had seven of the ten biggest U.S. stock launches. Still, many companies are choosing Nasdaq, especially as more investors are interested in tech stocks like Nvidia and companies moving from NYSE to Nasdaq.
Looking ahead, forecasts for a strong IPO market depend on U.S. interest rates dropping and the economy staying strong. Some think that inflation targets might slow down how quickly interest rates could drop in 2025. Additionally, Trump’s plans to impose tariffs might put pressure on the economy if other countries retaliate.
For now, people are feeling optimistic. The Nasdaq IPO Pulse Index, which predicts IPO activity, reached its highest level in over three years in October, showing that things are looking good for early 2025. Owen Lau, an analyst at Oppenheimer & Co., believes there is a lot of demand waiting to be met in 2025, and it could be a big year for IPOs.
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