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This was a big year for IPOs, but the struggle is real in a ‘perfect storm’

December 14, 2021, 11:34 AM UTC

Good morning, 

2021 has been a record-breaking year for IPOs in the U.S.

This year, I spoke with CFOs such as Matt Skaruppa of Duolingo, Anna Bryson of Doximity, and even Jessica Alba, founder and chief creative officer of The Honest Company, when their companies went public. All talked about how much work goes into an IPO. But for some companies among the 100 largest U.S. initial public offerings, going public hasn’t gone all that smoothly. 

My colleague Declan Harty offers an analysis in a new report, Half of 2021’s IPOs are suddenly trading below their offering price. “It’s a notable list that stretches across industries, continents, and company sizes,” Declan writes. “Big-name companies like Bumble and Robinhood have fallen below their initial IPO price, while others like Oscar Health and Playtika have, too.”

The brokerage app Robinhood went from facing controversy after freezing some trading in GameStop stock last January to making its public debut in late July. Since then, shares of Robinhood have tumbled. As of the market’s close on Monday, shares were down about 50% (from $38 to $19.70). Meanwhile, the dating app Bumble made a stunning stock market debut in February. Whitney Wolfe Herd, the 31-year-old founder, became the youngest woman to take a company public. On Feb. 11, Bumble’s stock price closed at $70.31, or about 63% higher than their $43 IPO price. But it closed on Monday at $34.99.

“A record 388 operating companies debuted in the U.S. in 2021, raising $30.2 billion in the process, as of Dec. 7, according to data from Renaissance Capital,” Declan writes. “With the Federal Reserve pumping billions into the financial system since the COVID-19 pandemic took hold in the U.S., stocks have been on a complete tear.”

But a “perfect storm of sorts has hit.” He writes:  

Inflation has spiked to levels not seen in decades. The Omicron mutation of the COVID-19 virus has reignited a swirl of confusion around the state of the pandemic. And the Federal Reserve has adopted a more hawkish tone, signaling that an interest rate hike may be on the horizon. It’s a swirl of factors that have begun to force investors to rethink how they view riskier assets, leading cryptocurrencies to fall off a cliff, shares in technology companies to whipsaw, and, of course, companies that recently did an IPO to falter. 

What will the recent IPOs struggles mean for the new year? Declan speaks with financial experts who share their insight about what to expect in the months to come. Read the full story here.


See you tomorrow.

Sheryl Estrada
sheryl.estrada@fortune.com

Big deal

Will cryptocurrency replace fiat currency one day? A new report from Finder, a personal finance comparison website, is based on a survey of 2,040 U.S. adults who answered that question. About 75% of respondents do not think that crypto will replace the U.S. dollar. But of the 25% who think crypto will take over, millennials were most likely to have that sentiment (38%) compared to just 5% of the "silent generation" (born between 1928 and 1945). Respondents were more open to learning about investing in crypto. About 37% said they would invest money in the digital currency if they better understood how it works.

Going deeper

Looking Glass, a new report by Thoughtworks (NASDAQ: TWKS), a global technology consultancy, explores technology-driven shifts in business in 2022 and beyond. Areas of interest include: evolving the human-machine experience, adoption of machine learning and artificial intelligence, accelerating towards sustainability, broadening the definition of "hostile tech," and resolving uncertainties around platforms. The report includes over 100 individual tech trends and "lenses" in which to view them. 

Leaderboard

Mike Morales was named CFO at Vector Laboratories, which provides life science products, effective Dec. 6. Morales has 25 years of experience in financial management and public accounting, with nearly 20 years in the life sciences sector. He joins Vector Laboratories from Sony Biotechnology, a wholly owned subsidiary of Sony, where he led the finance and operations teams. Morales spent almost 16 years at Amgen, where he held positions of increased responsibility at the manufacturing site and corporate headquarters. He has also held positions at Kite Pharma, Avery Dennison, General Motors, and Ernst & Young, LLP. 

John D. Porter was named SVP and CFO at Williams (NYSE:WMB), effective Jan. 1, 2022. Porter will replace John Chandler, who announced his planned retirement from Williams earlier this year. Chandler will serve as a strategic advisor until his retirement date in March 2022. Porter currently serves as Williams VP, chief accounting officer, controller and financial planning and analysis. Porter first joined Williams in 1998 as supervisor of revenue accounting. In 2001, he joined Forest Oil Corporation, serving in various finance and accounting roles. Porter returned to Williams in 2005, serving in roles including director of investor relations and assistant controller of Williams Partners, L.P.

Bill Quirk was named CFO at Karius, a blood diagnostic company. Quirk most recently served as CFO at Freenome. His financial experience includes raising capital on Wall Street for leading diagnostics and life sciences tools companies. Quirk spent almost 20 years as analyst at RBC Capital Markets and Piper Sandler, leading the healthcare research team.

Overheard

"The right person can make or break any succession plan. In a world where attracting and retaining talent is becoming increasingly difficult, the pool of candidates may be limited. In order to retain the best people, there needs to be a clear route for progression."

—David Ewing, a managing partner at private equity firm ECI Partners, writes about succession planning in an opinion piece for Fortune.

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