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Will The IPO Boom Continue In 2018?

Published 05/10/2018, 11:59 PM
Updated 07/09/2023, 06:31 AM

Recently, healthy growth across the market, a slew of pro-business tax cuts, and a deluge of tech-based IPOs have caused an IPO boom that’s reverberated around the globe, but many analysts and investors alike are beginning to gnash their teeth with worries that the IPO boom will soon fizzle out. Is there any truth to the rumors that our current splurge of IPO-based spending can’t continue, and if so, what does the future hold for companies that are about to debut on the market?

Here’s everything you need to know about the near-future of the IPO boom, and what investors should be keeping their eye on when it comes to next year’s market debuts.

The market is looking healthy

First things first, investors who are working themselves into a frenzied panic over the future of the market should take a deep breath and relax; by and large, the market is looking healthy, and there are few reasons to believe that the splurge of growth we’re experiencing right now will be slowing down anytime soon. While investors across the market are still keeping their guards up after trade war fears earlier this year resulted in full-blown economic warfare between the U.S. and China earlier this year, the IPO market has continued to boom despite political turmoil on the international stage, and it seems that investor’s worst fears have largely passed by.

This shouldn’t be surprising; after all, it’s a great time to debut on the market right now, and the U.S. economy in particular seems set to grow for the immediate future. After businesses responded positively to the GOP’s recent tax reform initiatives, which saw untold billions in capital flood back towards markets, there’s plenty of cash to be invested floating around right now. Consumer confidence remains at an all-time high, too, and there’s nothing that today’s customers are more interested in than cutting-edge tech products, which are often the result of vibrant tech IPOs.

The importance of these tech IPOs can’t be undercounted; the thriving IPO market we’re seeing right now is by and large buoyed by tech stocks, most of which are doing extraordinarily well right now. 2017 was filled with soaring predictions that the next year would see tech stocks keeping the market afloat, and investors seem even more confident right now that 2019 will be very similar. While some disappointing debuts are to be expected, failed IPOs only contribute to the resilience of those that remain, and investors don’t seem ready to cut short their huge spending spree.

Bad headlines won’t spoil things

For some, 2018 has proven to be a tricky situation, largely because some tech stocks have fared quite well while others have suddenly plunged. Media headlines are particular for tech stocks especially, and many investors are clutching their pearls that whatever company they back will be the next Facebook (NASDAQ:FB), and suffer from a brutal slew of headlines surrounding a data breach or an invasion of the public trust. Bad headlines haven’t spoiled things for the broader market, however, and tech startups seem entirely unperturbed by the troubles currently besetting established behemoths like Amazon (NASDAQ:AMZN) and Facebook.

As a matter of fact, negative headlines hitting existing tech stocks will likely only fuel the fires of future IPOs; after all, if tech startups can convince would-be investors that they’re offering solutions to many of the tech-centric problems currently impacting society, they can stand to raise some serious capital to compete on the market. Health care and cutting-edge tech companies will remain at the forefront of the market’s growth for the near-future, and investors who are doubting this industry are likely worrying themselves into a fever over nothing.

Predictions across the board are expecting great things, too; Ernst & Young’s recent research notes that the Chinese and American economies seem to be more in-sync than ever despite trade war fears, for instance, and asserted that the results of such economic cooperation will doubtlessly be fruitful for markets. International trade continues to tick upwards despite bellicose rhetoric surrounding international trade disputes, and consumers across the world are becoming more globally minded when it comes to scooping up foreign products and services, too, so the IPO boom, spurred by derivative financial instruments, isn’t likely to stay within the U.S., either.

With American and Chinese markets both moving ahead at full-speed, and with IPOs in both nations finding thriving markets of investors ready to back them, expect the IPO boom to continue well into 2018 and beyond. Tech and healthcare stocks in particular deserve the lion’s share of the credit for this recent uptick in investment, but it’s a simple matter of fact that markets are incredibly attractive to investors of all stripes right now. IPO-watchers should be thrilled; for the remainder of the year at least, the IPO boom is only likely to grow in size and scope.

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