The median size of initial public offerings (IPOs) in the United States increased significantly in 2020. The median IPO size reached 18 million U.S. dollars, a dramatic decrease compared to the previous year. This figure gives an idea of how willing speculators in the United States are to invest in a company going public, which is the process of being listed on a stock exchange for the first time.
Who goes public?
Most IPOs come from relatively new firms that have grown quickly. For example, the Alibaba Group Holding IPO was the largest IPO in the United States. This firm is a relatively new tech company overseen by Jack Ma, who had already generated billions in private funding before going public. However, Visa’s 2008 IPO occurred 50 years after the company’s founding, when it already had millions of credit cards in circulation. Still, the company had generated enough enthusiasm for its IPO to raise a record amount of money.
Over and under the median
The megadeals such as the Alibaba IPO are rare, though there is an increasing number of startup companies valued one billion U.S. dollars and over. While these raise the median value, the worst IPOs lower it. A successful IPO can lead to huge gains in valuation, the IPOs with the lowest return lose over half the company’s value.
