Rivian electric trucks are seen parked near the Nasdaq MarketSite building in Times Square on November 10, 2021 in New York City.
Michael M. Santiago | Getty Images
Tech stocks have gotten hammered across the board in 2022. The downdraft has been particularly brutal for companies that held their market debuts in 2021.
Of 53 tech-related companies tracked by CNBC that went public last year through an IPO or direct listing, all but three are now trading below their offer price (for IPOs) or opening price (for direct listings).
More than half have tumbled by at least 50%. That includes some of the most notable names, such as trading apps Coinbase and Robinhood, electric car maker Rivian, cloud software vendor UiPath and fin-tech companies Marqeta and Toast. They’ve all lost over 60% of their value.
The sell-off started late last year as soaring inflation and concerns of rising interest rates pushed investors out of the riskiest assets with the highest multiples. The downturn intensified in February following Russia’s invasion of Ukraine, and neared panic-selling territory late last week after the market digested commentary from the Federal Reserve and a half-point increase to its benchmark interest rate.
The Nasdaq fell 4.3% on Monday, closing at its lowest since November 2020. On Friday, the tech-heavy index wrapped up its fifth straight weekly decline, its longest losing streak since 2012.
IPOs are the last thing investors want to touch at the moment. The market for new issues has been dry throughout the first four-plus months of this year, and nothing notable is on the tech IPO calendar for the duration of the second quarter.
Companies that were aiming to go out in the first half of 2022 have no appetite to continue down that path. That’s because most of them raised venture financing at valuations that reflected where the market was the last couple of years, as tech was on the tail end of a decade-long rally. Going public today would require a complete revaluation of their business and leave many late-stage investors and employees with out-of-money stock.
IPO index tumbles
Grocery deliverer Instacart is the only company in that class that’s publicly taken its lumps. In March, the company said it cut its valuation by about 40% to $24 billion, a move that allows Instacart to tell employees and recruits that upcoming stock awards will be issued at a lower price.
But even that reduction may not fully reflect how much investor sentiment has soured on the part of the tech market that for so long represented the highest flyers.
The Renaissance IPO ETF, which tracks about 100 companies that have gone public in recent years, is almost 60% off its 52-week high from September. The index plummeted 9.7% on Monday, which brought its drop in May to 19%.