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July 27, 2022

Halfway through 2022, US TMT IPO activity has dropped drastically

2021 was a record year for tech, media, and telecom (TMT) IPOs, with a total of 558 listings raising a total of $237 billion. However, the IPO market has slowed further from Q1 to Q2 of 2022, leading to an overall drop in IPO listing in the first half (H1) of 2022.

The US had the most TMT IPOs between 2018 and 2021 in terms of volume, with 523 over this period, according to GlobalData. After a record-breaking 2021, H1 2022 saw only 18 IPOs in the US, which is an 86% volume fall from H1 2021.

In Q2 2022, the US saw only eight tech IPOs with gross proceeds of $1.2 billion. This is the weakest quarter in any of the past four years, while there were no billion-dollar deals this quarter, against three in the first. The first quarter saw gross proceeds of $12.5 billion, down 57% from Q1 2021, while Q2 2022 saw an even greater drop in deal value, down to 97% from Q2 2021

What is causing the TMT IPO market to slow?

There are two main causes of this downturn in the market. The first is instability and geopolitical tensions following the Russian invasion of Ukraine, which has not only affected the US TMT IPO market but the global IPO market too. The other factor is soaring inflation and the prospects of further increases in interest rates, resulting in falling share markets.

Notable tech IPOs in H1 2022

There were several notable tech IPOs in the first half of 2022. These were:

  • TPG – TPG, a private investment company, was the biggest IPO in H1 2022. It is valued at $9.1 billion, raising $1 billion in the US. It priced its IPO at $29.50 per share.
  • Credo Semiconductor – The chips and semiconductor company made its debut on the NASDAQ on January 31, 2022. The stock started trading at an IPO issue price of $12.10 apiece. It raised $183.8 million in proceeds and soared to a valuation of nearly $1.4 billion.
  • SKYX Platforms – The smart home appliances company made its debut on the NASDAQ on February 9, 2022. The IPO proceeds were $23.1 million, with an issue price of $14. This valued the company at $1.1 billion at the time of the IPO.
  • Applied Blockchain – The blockchain enterprise was listed in the US in April 2022. The company raised proceeds of $40 million at an offer price of $5 per share. This valued the company at $0.5 billion at the time of listing. It will use the net proceeds to lease or purchase additional property.

The outlook for Q3 2022 remains uncertain

Many mega IPOs were postponed in the first half of 2022, indicating a healthy pipeline of deals that are likely to come to market once the current uncertainties and volatility pass. This includes Justworks (cloud), Rhodium (blockchain), Authentic Brands Group (ecommerce), and TypTap (fintech). However, the outlook remains uncertain.

Despite the weak market performance in H1 2022, several TMT unicorns are still planning to go public in the second half of the year. These include companies such as Reddit (social media) and GoPuff (ecommerce), while several others have also filed for an IPO including Instacart (ecommerce), Mobileye (autonomous vehicles), and Turo (ecommerce).