Why Has the IPO Market Gone Cold?

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Heading into 2025, the outlook for initial public offerings (IPOs) seemed to be turning a corner. But those expectations proved overly hopeful – at least for now.

Several highly anticipated upcoming IPOs have hit the brakes. StubHub, a ticketing marketplace, has shelved its plans, while Klarna – a buy-now-pay-later platform – continues to delay its long-anticipated debut. Both were widely believed to be ready to launch their IPOs in April.

Chime, a well-known fintech player, and Hinge Health, a digital health startup, have also opted to wait to go public.

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If this feels familiar, that's because it is. IPO volumes have been underwhelming for the better part of the past three years.

In 2022, just 71 companies went public, raising a mere $7.7 billion, according to Renaissance Capital, which is a provider of pre-IPO research and IPO-focused ETFs.

Activity picked up in 2023 with 150 deals totaling $29.6 billion. But that still paled in comparison to the IPO boom of 2021, which saw 397 offerings raise a staggering $142.4 billion. Even in 2020, amid pandemic uncertainty, there were 221 initial public offerings for $78.2 billion.

In 2025, only 70 offerings have raised $9.9 billion. That's barely on pace with last year.

So what's happening? And when might the IPO market get back on track?

Volatility, valuation concerns keep IPOs on ice

The U.S. IPO market remains mired in uncertainty. Much of the recent chill stems from renewed global trade tensions – specifically, President Donald Trump's "Liberation Day" tariffs that were announced on April 2, which sparked retaliatory moves and reignited fears of a broader trade war.

This uncertainty, coupled with a sell-off in tech stocks and increasing market volatility, has made pricing new offerings a major challenge.

"There was a pretty clear shift in IPO sentiment after the tariff announcements, which introduced a lot of uncertainty into the market," says Avery Marquez, director of investment strategies at Renaissance Capital.

"Volatility can be a strong headwind for new issuance, even when investor sentiment and risk appetite are robust. But this came while the trading environment was already somewhat weak in the wake of the mid-Q1 sell-off," Marquez adds.

Beyond tariffs, macroeconomic pressures – including inflation, higher interest rates and geopolitical instability – have spooked investors.

Given the cloudy outlook, major public companies such as Ford Motors (F), General Motors (GM), United Airlines (UAL), Mattel (MAT) and UPS (UPS) have scaled back or withdrawn their financial guidance.

It's no wonder, then, that executives at IPO-bound firms are also treading carefully.

Meanwhile, some of the most promising startups, especially in AI, are opting to stay private longer. OpenAI's $40 billion raise at a $300 billion valuation is just one example of a company flush with cash that sees little reason to brave the public markets at the moment.

"Today's founders have a far wider array of financing options available to them," said David Spreng, chairman, founder and CEO of Runway Growth Capital.

Expansion in the private credit and venture debt markets allows private companies with solid fundamentals to get the capital they need, Spreng adds. "Rather than rush toward an IPO, many late- and growth-stage businesses are choosing to stay private longer, using minimally dilutive debt to extend their runway, strengthen their businesses and preserve ownership."

Are there signs of a thaw?

Still, there are glimmers of optimism that activity in the IPO market is starting to pick back up.

The Renaissance IPO ETF (IPO) share price has recovered to levels not seen since early February, reflecting a modest revival in investor interest.

The Cboe Volatility Index (VIX), a measure of "fear" in the stock market, has also eased off recent highs, suggesting a slight calming of investors' nerves.

And new deals are happening, albeit selectively. Two insurance firms, American Integrity (AII) and Aspen Insurance (AHL) went public in early May and collectively raised more than $500 million.

And while the CoreWeave IPO – a provider of infrastructure for AI developers – underwhelmed at first, the stock has since climbed above its IPO price, a positive sign for others waiting in the wings.

Market watchers believe that when IPO activity resumes in earnest, it will center on well-established, cash-flow-positive businesses in resilient sectors – think defense and artificial intelligence (AI).

Ultimately, the IPO market tends to rebound faster than expected once conditions improve. The key will be less about chasing the next unicorn and more about rewarding strong fundamentals. Until then, companies and investors alike are playing a cautious, wait-and-see game.

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Tom Taulli has been developing software since the 1980s when he was in high school. He sold his applications to a variety of publications. In college, he started his first company, which focused on the development of e-learning systems. He would go on to create other companies as well, including Hypermart.net that was sold to InfoSpace in 1996. Along the way, Tom has written columns for online publications such as Bloomberg, Forbes, Barron's and Kiplinger. He has also written a variety of books, including Artificial Intelligence Basics: A Non-Technical Introduction. He can be reached on Twitter at @ttaulli.