An initial public offering, usually shortened as IPO, represents the first time a company makes its shares available for trade on a stock exchange. Private companies can use IPOs to raise capital and fuel future growth, and hundreds of companies go public most years, presenting an opportunity for interested investors.
The number of IPOs per year varies, depending on market conditions and the ease with which companies can raise capital via other methods. IPO statistics can offer some perspective on how frequently companies decide to go public and which sectors tend to see the most significant launches.
Number of IPOs by Year
A look at IPO history shows that the number of initial public offerings fluctuates significantly by year and decade. Since 2000, there have been nearly 5,900 IPOs. Here’s a look at IPO filings by year for that time frame:
|Year||Number of IPOs|
The number of IPOs in any given year tend to follow movements in the economic cycle. In 2008, for example, there were just 62 IPOs as the economy and stock market were in the midst of a historic downturn. IPO activity didn’t pick up the pace again until 2010, once the Great Recession had ended.
💡 Recommended: What Is IPO Pop?
Previous Year IPOs
Companies were more likely to go public in the 1980s and 1990s than in recent years. Between 1980 and 2000, an average of 311 firms went public each year.
IPO activity spiked in the mid-90s as entrepreneurs sought to join the growing dot-com bubble.
Meanwhile, an average of 187 firms went public annually between 2001 and 2011. In recent years, larger, more established companies are more likely to go public than smaller private firms.
However, a record number of companies — 1,035 — went public in 2021. Some analysts point to loose monetary policy and a booming stock market as reasons so many companies went public during the year.
Additionally, one of the factors driving IPOs during 2020 and 2021 was an increase in IPOs for special-purpose acquisition corporations (SPACs). SPACs are essentially holding companies that go public with the sole purpose of acquiring another company.
Largest IPOs in 2022
Following the boom in IPOs in 2021, the number of companies that went public during 2022 dramatically decreased. As of August 2022, 134 companies went public during the year, down nearly 81% from a year earlier.
The number of IPOs has decreased due to several factors, including tight monetary policy to combat inflation and a dramatic decline in the stock market. Of the 134 IPOs during 2022, 66 occurred in January and February, right before the Federal Reserve started raising interest rates.
The following companies had the largest IPOs during the first half of 2022, based on gross IPO proceeds raised from investors. Because few large companies went public during the beginning of 2022, four SPACs were among the largest IPOs.
|Company Name||Ticker||Gross Proceeds||IPO Date|
|TPG Inc||TPG||$1.1 billion||Jan. 13, 2022|
|Screaming Eagle Acquisition Corp.||SCRM||$750.0 million||Jan. 6, 2022|
|Bausch & Lomb Corp.||BLCO||$630.0 million||May 5, 2022|
|Excelerate Energy, Inc.||EE||$441.6 million||Apr. 12, 2022|
|ProFrac Holding Corp.||PFHC||$328.1 million||May 12, 2022|
|Sound Point Acquisition Corp.||SPCM||$258.8 million||Jan. 26, 2022|
|HilleVax, Inc.||HLVX||$230.0 million||Apr. 29, 2022|
|Kensington Capital Acquisition Corp.||KCAC||$230.0 million||Jan. 20, 2022|
|Credo Technology Group Holding Ltd.||CRDO||$230.0 million||Jan. 26, 2022|
|Valuence Merger Corp. I||VMCA||$220.1 million||Jan. 19, 2022|
Evaluating the performance of stocks after a company goes public can give you an idea of how successful IPOs tend to be overall. However, it’s important to remember that it’s impossible to predict whether a stock will boom or bust in the months and years after it starts trading.
Sectors With the Most IPOs in 2022
During the first two quarters of 2022, the finance, health care, and technology services sectors had the most IPOs.
IPO distribution varies across stock market sectors. Some sectors churn out more IPOs per year than others. In 2020, for instance, some of the biggest IPOs belonged to companies in the tech sector, with financial services and health care not far behind. In 2021, technology, industrials, and health care dominated the IPO landscape on a global scale.
The IPO Process
Companies need to follow several steps to go public. Here’s a brief overview of the steps in the IPO process:
1. Choose an underwriter or group of underwriters (usually an investment bank registered with the SEC to offer underwriting services).
2. Complete IPO due diligence, including a deep dive into the company’s financials and the background of upper management.
3. SEC review and roadshow, in which the company markets its IPO to potential investors.
4. IPO pricing, wherein brokers and underwriters work with the company to determine the price of an IPO.
5. Launch, when the company goes public and shares trade publicly for the first time.
6. Stabilization: the 25-day period during which the underwriters help maintain the stock’s price.
7. Transition to market competition as the underwriters stop supporting the price.
Why Do Companies Go Public?
The process of going public takes time and financial resources. Nonetheless, there are many reasons private companies might choose to go public.
For many companies, an IPO is an opportunity to raise capital from investors. The company can use this capital to fund further growth and expansion, potentially driving bigger profits down the line.
Exit for early investors
If a company received funding from angel investors or venture capitalists, an IPO offers an opportunity for them to give that money back. As a shareholder, early investors can sell their shares on a secondary exchange following the IPO.
Private companies may also use an IPO for employee hiring and retention. By including shares of company stock in an employee benefits package, it may be easier to attract and retain top talent.
Going public can raise a company’s credibility in the eyes of the marketplace. That could help attract new investors and customers, fueling further growth.
Investing in IPOs
It’s possible to invest in IPO stocks through an online brokerage account. However, you’ll first need to find a brokerage that offers IPO investing, as not all of them do.
💡 Not sure how to buy IPOs? Here’s a step-by-step guide on how to buy IPOs.
The next step is reading through the IPO prospectus. This document offers information about the company, though you may still want to do some independent research of your own. Specifically, you may want to consider the structure of the company’s board, the estimated IPO price, the company’s size, estimated valuation, annual revenues, and other fundamentals and financial ratios.
💡 Recommended: How to Read Financial Statements: The Basics
This initial research can help you decide if the company aligns with your risk tolerance and goals before you invest. If you’ve determined that you want to invest in a particular IPO, you’d simply have to place the order with your broker. That requires telling your broker which IPO stocks you want to buy, how many shares, and what type of order to place. Otherwise, buying IPO shares is fairly similar to buying shares of stock that are already traded on the market.
Looking at IPO statistics and IPOs by year can help you track trends and understand just how often companies go public. If you’re interested in adding IPOs to your portfolio, it’s also important to know which sectors tend to have the most and least IPO activity.
Once you’re ready to invest, you can do so through an online brokerage such as SoFi Invest®. SoFi members, for example, have access to IPOs and pre-IPO listings from a variety of companies. To access them, you’ll need to open an account on the SoFi Invest® brokerage platform.
Photo credit: iStock/Inside Creative House
The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results.
Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal. Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or prequalification for any loan product offered by SoFi Bank, N.A.
Investing in an Initial Public Offering (IPO) involves substantial risk, including the risk of loss. Further, there are a variety of risk factors to consider when investing in an IPO, including but not limited to, unproven management, significant debt, and lack of operating history. For a comprehensive discussion of these risks please refer to SoFi Securities’ IPO Risk Disclosure Statement. IPOs offered through SoFi Securities are not a recommendation and investors should carefully read the offering prospectus to determine whether an offering is consistent with their investment objectives, risk tolerance, and financial situation.
New offerings generally have high demand and there are a limited number of shares available for distribution to participants. Many customers may not be allocated shares and share allocations may be significantly smaller than the shares requested in the customer’s initial offer (Indication of Interest). For SoFi’s allocation procedures please refer to IPO Allocation Procedures.