While Wall Street's hot IPO streak has cooled off sharply, and this did come as the longest US government shutdown in history took place and a more cautious move from investors' slow deals to a near standstill, while November is on track to be one of the slowest IPO months of the year.
And despite the slowdown, demand for new offerings remains strong as investors look for cheaper entry points in a market that still appears expensive.
And behind the scenes, bankers are prepping for bigger potential listings in 2026, including Data bricks, Canva, and CAD.
Joining me this morning here at the New York Stock Exchange is Jim Neeson, IPO expert and founding executive for Connor Group.
Jim, welcome.
Thank you so much for joining me.
Remy, thank you so much.
Well, here we are about to end 2025.
So tell me about the slowdown we've seen so far in 2025.
You know, we just issued what we call our Conner Group IPO report card for 2025, and you know the grades were mixed.
I say in terms of quantity of deals we had an A.
It was a record year since 2021, 50% increase in IPOs since 2024.
In terms of the mix of deals, it was kind of a B.
I mean Sacks are back, right?
40% of the deals were spacks out there, as well as, you know, you had private equity really coming into the party.
Performance for trading was kind of a C, right?
Only 51% of the deals that actually went out this year are trading above their IPO price.
So I think, you know, a report card trending up to the right, but still it gives us some good momentum going into 2026.
The shutdown no doubt created a little bit of an IPO power nap, but we're seeing strong demand moving into 2026.
Yeah, I like how you're characterizing that government shutdown and the after effects because here on Wall Street we're still waiting for economic data to come out.
And that will inform the Federal Reserve's next move, obviously, but when it comes to the backlog with the SEC, break down what you expect to see as we move not just into your end but also 2026.
Yeah, you know, so the 43 day shutdown, I kind of think of it like Starbucks was closed and all of a sudden it's Monday morning.
People need their caffeine, Joel, right?
So you definitely see that queue.
There's 436 deals right now publicly on file to go public.
That is an all-time high mark.
You also have over 55. private company unicorns and you have a lot of both VC and private equity where they're looking to return money to their LPs.
So I'd say a lot of really good factors pushing us into 2026.
Last note I'll make is if you look at earnings season, 83% of the companies in Q3 had a positive earnings surprise.
That was the 4th quarter that we had double digit S&P earnings increases.
So it's a really good sort of strong tailwinds pushing us into performance in 2026.
A lot of optimism.
Yeah, Jim, I like that Starbucks analogy as well.
It really makes sense.
So here, when we think back to IPOs that took place on the trading floor of the New York Stock Exchange, perhaps they might might come to mind or even clear, but some of those debuts that we've seen have come off in terms of price.
So what's going on there?
Yeah, you know, I think there's a couple of things out there.
I think, you know, there's an art and a science in terms of pricing an IPO deal.
One is you want to gauge sort of institutional demand.
The other is you sort of want to understand.
I think the retail performance is going to be?
Do you leave money on the table or not?
The other thing that's interesting is a lot of times the bankers, customers are the institutional investors, and so are they kind of helping them get returns over a longer period of time?
I would say that is going to go into the calculus of 2026, maybe some more conservative pricing, get more deals out there.
That's why we're forecasting a 20% IPO uptick of deals in 206 versus 25.
There's a lot of demand, but I think there's also a lot of supply as well.
Yeah, and when you think about the companies that are positioning to go public in 2026, there are a lot of moving parts, obviously.
So when you think about the catalysts that companies have to keep in mind, what companies are best positioned to go public in this environment?
Yeah, you know, I think of it like the four legs on a on a chair, right for stability, right?
You need revenue, profitability, a story, and to be public company ready and all of those are really important.
Now what's interesting. in a market like this, both revenue and profitability metrics are more stringent than you would normally have out there.
I think that's a lot of sort of the challenge for some companies.
Are they the size and scale?
The other thing is you need AI to be a part of your story.
You don't have to be a pure play AI company, but you need it where it's woven into whatever your business model is, and you need to do it in an authentic way.
It takes companies sometimes a little bit to sort of make it where it really feels organic to the business.
And speaking of which, can you tell me which potential 2026 IPOs do you think will really reignite the IPO market and why?
Yeah, you know, I think about like the IPO Olympics.
What are the deals that are going to be on the podium at the end of the day?
You mentioned a couple, right, a data bricks, a plaid, a stripe, a cerebrist, a blockchain.com, a Kraken.
Those are the ones that a lot of people are really looking at as some of those bellwether deals.
But I would also suggest, I mean we have 14. clients that have been preparing for 26 and 27 type of IPOs.
There are a lot of companies in that IPO gym.
They're getting ready, right?
They're sort of getting the endurance and the strength to go out in the markets and really approach the deals.
So there's a lot of sort of strong deals out there.
It'll be large cap, mid cap, and small cap, and I love that diversity.
It's sort of a broad base.
And for viewers out there who are anticipating IPOs, what would you say from an investor perspective?
Yeah, you know, I would say there are hits and misses, and I think that's really important to sort of be diligent.
What is the story and it's not even just sort of the initial trading piece, but if to be a long term investor, I think is a really a smart strategy of a company you want to get to grow and build with.
If it's sort of a quick type of flip deal, those are hard to sort of gauge and as you know, there's a lot of other factors out there, the economy, externalities, all those type of things, but I.
It's a story that resonates for you and is it something that you can see being a long term investor in?
And finally, we have 60 seconds here.
So what is your take when it comes to specs right now?
Yeah, you know, I think Sacks, there were 115 this year.
It's 40% of the market.
They raised over $21 billion.
What I love about that is all of those facts are going to be looking to find target companies to actually start to trade, you know, publicly.
That's a really important dynamic.
The marketplace is it's a way for companies to actually get liquidity.
You'll also see a lot more companies of the 436 deals on file.
A lot of them are Sacks, and so you're going to see a lot of activity happening in 206.
I think it's a really healthy dynamic, especially for some of those maybe small cap or a nano cap type of companies.
OK, Jim, we will have to leave it there, but thank you so much for joining us and hopefully you'll be back in the new year.
Happy holidays.
Thank you.
