AFTER A PROLONGED SLUMP, the IPO market shows signs of recovery, with several high-profile companies planning to go public in September 2023. Among them are Arm Holdings, Instacart, and Birkenstock, which are expected to raise billions of dollars and command hefty valuations. Arm Holdings, a chip designer owned by SoftBank Group, filed for the year's biggest IPO, seeking a valuation of up to $52 billion. Instacart, an online grocery delivery platform, revealed its profitability and a strategic investment from PepsiCo in its filing. Birkenstock, a footwear maker known for its sandals, is also gearing up for a listing that could value it at more than $5 billion.
These IPOs could help revive investor interest in new issues, which rising interest rates, inflation, geopolitical tensions, and a broad market downturn have dampened. The Nasdaq dropped 33% in 2022, while the S&P 500 fell 19.4%, making it the worst year for IPOs since 2009. Only 14% of the 397 IPOs in 2021 are trading above their offer prices as of September 1, 2023.
In addition to the IPOs, some notable developments in the retail sector could affect the market sentiment. Target announced that it will add Starbucks to its curbside pickup service, allowing customers to order coffee and other items from the app and have them delivered to their cars. This move could boost Target's sales and customer loyalty and give Starbucks an edge over its competitors in the delivery space. Tapestry, the owner of Coach and Kate Spade, said it will acquire Capri Holdings, the parent company of Michael Kors and Versace, for $8.5 billion in stock. The deal will create a luxury fashion powerhouse with more than $10 billion in annual revenue and a diversified portfolio of brands.
The IPO market and retail sector outlook is cautiously optimistic as these companies seek to capitalize on their growth potential and competitive advantages. However, there are still many uncertainties and risks that could derail their plans or affect their performance. The IPO market is susceptible to market conditions and investor sentiment, which can change quickly and unpredictably. The retail sector faces supply chain disruptions, labor shortages, changing consumer preferences, and regulatory pressures. Therefore, these companies must demonstrate their resilience and adaptability to succeed in the long term.
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