Macro Take: Consumer Performance & Delayed IPOs
From StockX to Chime, Instacart and Fabletics
Macro Take: Consumer Performance & Delayed IPOs
By Kirsten Stainer & Molly O’Shea
Not-so-breaking-news: markets have officially entered volatile territory - more specifically, a decade that will be characterized by high interest rates, the steepest monetary tightening cycle since the 1990s, and rising geopolitical tensions. To top it all off - even Softbank and Tiger think valuations are too high. If this isn’t a sign that hell hasn’t frozen over, I’m not sure what does. But I digress…
What is compelling amid this turbulence is that consumer sentiment hasn’t sharply tilted downwards in parallel. Historically, any hint of a looming economic compression has brought consumer spending to an abrupt lull out of fear of less consumption across the board. It happened in 1929, and again in 2008, and it’s likely to take a similar turn for the worst once again in 2022. History, as much as we don’t want it to, does have a tendency to repeat itself.
Of course, with the Russian invasion of Ukraine and its impact on global crop exports and gasoline prices, the consumer category is, and will continually be, meaningfully strained. In writing this, it’s difficult to justify the importance of consumption when families are being separated and men are being drafted, but the consumer category is a strong reflection of current global events, even in its most unpredictable state. If you’d like to support relief, here is a list of Ukrainian charities to donate to, sourced by Anne Applebaum.
Consumer spending has been the engine for growth in the U.S. economy, humbly compensating for weaker areas of growth in the market. Two-thirds of GDP is made up of consumer spending. This maintains the consumer category’s status as a legitimate litmus test that indicates the underlying health of the economy.
Enough of macro analysis, let’s get into what volatility means for scheduled IPOs, a list of delayed listings, and SPAC performance YTD.
So what does a bleak macro outlook mean in terms of the health of IPO markets?
Let’s rewind to a year ago from today. IPO markets last January proved to be the most active in the past 20 years, reflecting strong tailwinds accelerated by vaccine rollouts and rolling liquidity from government stimulus.
There were 2,388 deals last year in 2021—a 64% increase from 2020—raising more than $453 billion in assets, according to EY’s annual global IPO report. There were a whopping 416 listings in the U.S. alone.
Fast forward to 2022, where $26.7 billion worth of IPOs have priced, bringing deal volume down 60% in comparison to a record start in 2021. Equity markets took a hit throughout January and created a daunting market for new listings and leading to a surge in delayed IPOs.
The Growing List of Delayed 2022 IPOs
A list of delayed IPOs in no particular ranking and the most recent updates surrounding each listing:
The grocery delivery platform has delayed their IPO debut to focus on accelerating some of its services for grocery retailers, even considering going beyond delivery. It was initially planned for an early 2021 debut, then postponed again to Q4 2021. It is now hanging at an undetermined 2022 date.
Prior to the apparel brand management company’s full withdrawal from the IPO process in the first week of January, Authentic Brands Group announced their first delay in November 2021 in favor of selling stakes to CVC Capital and HPS Investment Partners.
The Canadian modern furniture online retailer has delayed their IPO to March due to market turbulence. Originally, Article was scheduled to file a prospectus in January.
The specialty grocery chain, owned by Apollo Management, was intended to make its Nasdaq debut in August 2021. Fresh Market’s delay was announced last minute and set for 2022 though undetermined due to the stock selloff. The company first went public in 2010 but struggled to compete with Whole Foods and Kroger Co., among its other food retailer peers.
The Chinese fashion e-commerce website recently revived its plan for a New York listing. It initially prepared for an IPO in 2020 but due to rising U.S.-China tensions and an unpredictable market, had decided to shelf its plans. This would be the first major equity deal by a Chinese company in the United States since regulators tightened oversight of such listings in July.
Workout apparel brand, Fabletics, announced its plans to explore an IPO in July 2021. No IPO date has been set yet as the general public awaits more information.
Sneaker reselling platform, StockX, is working with underwriters Goldman Sachs Group and Morgan Stanley on their IPO listing, with a broad target IPO timeframe of the first half of 2022. The company has disclosed that at this stage the timing is subject to change.
Plant-based meat company, Impossible Foods, have announced their interest in an IPO listing since April 2021. An official date, however, has not yet been set with speculation surrounding the cautionary tale of the company’s main rival, Beyond Meat (BYND), and their lackluster performance since their debut. Combined with the state of the market, Impossible Foods continues to hold off its IPO talks.
A Balaton, Minn.-based early-stage seafood and biopolymer production company, postponed its IPO due to market conditions. Ralco Nutrition, Schwan’s Shared Services, and Eagle Energy back the firm.
Digital bank Chime is delaying its IPO until H2 of this year, likely until the fourth quarter, according to a person familiar with the matter. Last fall, Forbes reported that Chime had been targeting March 2022 to go public at a valuation between $35 billion and $45 billion. Chime has pushed back its IPO time line because it’s focusing on releasing new products, which could include lending or investing features, the person says. Its target valuation hasn’t changed.
Publicly traded fintech stocks have fallen by 40% since late October 2021, with companies like Block and PayPal off 60%. Chime’s decision to delay its IPO was made before stocks started to tumble, the person claims. A Chime spokesperson didn’t respond to Forbes’ request for comment. Source: Forbes
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SPAC Performance YTD: