ETF Edge

IPOs are still headed for a record year after summer slump, investor says

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ETF Edge: It's a record year for IPOs

The final months of 2021 could tip the initial public offering market into record territory.

Though new listings slowed over the summer, excitement is building for an end-of-year rush that could see Warby Parker, Brooks Brothers parent Authentic Brands and Allbirds hit the public markets, Renaissance Capital's Kathleen Smith told CNBC on Wednesday.

"The numbers are already astonishing," the firm's co-founder, principal and chairman said on CNBC's "ETF Edge."

Renaissance Capital runs the IPO ETF (IPO), which had a record year in 2020 and is up just over 8% year to date. So far in 2021, 279 IPOs have raised $96 billion in capital.

"We expect to end the year with another 100 IPOs ... which will be a record compared to anything we've seen since the internet bubble in 2000, and we're thinking it'll be about another 30 billion raised," Smith said.

That would make for the highest capital raise in history at $126 billion and yet another sizzling year for the IPO market.

Some $3 billion in issuance is on the line this coming week. Several of the companies planning to go public are:

  • Digital consulting firm Thoughtworks
  • Athletic footwear retailer On Holdings
  • Sports betting data company Sportradar
  • Drive-thru coffee shop operator Dutch Bros
  • Health-care marketing firm Definitive
  • Identity management software provider ForgeRock

Stripe, Impossible Foods, Rivian, Sweetgreen, Instacart, Chobani, Flipkart, Toast, Reddit, Freshworks, Republic Airways and TPG are among those rumored, but not confirmed, to be preparing for 2021 debuts.

"I would say we're seeing a rush," Smith said. "I think it's good to see breadth of that sort in the IPO market."

As long as the broader market doesn't turn sour, Smith sees smooth sailing ahead for many of these names.

"The IPO mechanism has been working just fine," she said. "I don't see why it wouldn't. And unless we get to some really big corrections, I think the pricing mechanism will give us deals that have values that make sense to investors."

The IPO ETF has climbed nearly 11.5% in the last three months versus a 6% gain for the S&P 500. Though it is trailing the major index year to date, it's outperforming on a one-year basis, up 47.5% versus the S&P's 34.5% gain.

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IPOs pace for record year in 2021. What to watch now