2023's most anticipated IPOs weren't always the big winners

Key Points

• In 2023, 146 companies have gone public in the U.S. markets, a 16.09% decrease compared to the same time last year.
• The largest IPO deal in 2023, in terms of money raised, was chip designer Arm, valued at approximately $5.22 billion.
• Tech companies, including Reddit, Databricks and Stripe, may make long-awaited public debuts in 2024.

So far in 2023, 146 companies have gone public in the U.S. markets, down 16.09% from the same time last year. Although the IPO market has been choppy amid higher interest rates and broad equity market uncertainty, the new companies as a whole have outperformed the S&P 500.

The Renaissance IPO ETF NYSEARCA: IPO has returned 34.83% year-to-date versus the 20.17% of the SPDR S&P 500 ETF Trust NYSEARCA: SPY. However, the Renaissance IPO index includes stocks that went public prior to this year, with the average age of companies being 1.3 years. There is no overlap with the S&P 500.

Chip company Arm was largest 2023 IPO

The largest 2023 deal, in terms of money raised, was chip designer Arm Holdings plc NASDAQ: ARM, valued at about $5.22 billion after its September IPO. While Arm launched with great fanfare, as it was the largest deal since the 2021 IPO of Rivian Automotive Inc. NASDAQ: RIVN, the stock has had a wild ride. Shares are up 26% in November, after pulling back sharply after the first-day-of-trading high of $69. That's the highest price the stock has achieved yet. 

Technology stocks are frequently among the best-performing new companies within a few years of their listings. New tech companies tend to be fast growers, which is why their IPOs are often eagerly awaited. 

As 2023 winds down, we'll see fewer companies going public. Five companies are on deck for IPOs in the last week of November and the first week of December. More companies may launch in the subsequent weeks, as IPO dates are rarely set more than seven to 10 days in advance. However, the pace is sure to slow as the holiday season approaches.

J&J spinoff has been disappointing so far

Disappointing IPOs include Johnson & Johnson NYSE: JNJ spinoff Kenvue Inc. NYSE: KVUE, which is down 8.36% from its IPO price of $22 and down 25% from its opening day high of $26.90. The Kenvue chart shows the stock's brief post-IPO rally, followed by a swift decline.  

Analysts still have high hopes for Kenvue, which is comprised of the Johnson & Johnson consumer products division. Kenvue analyst forecasts show a price target of $26.92, an upside of 33.78%. The consensus rating on the stock is "moderate buy." 

A 2023 IPO success story is restaurant chain Cava Group Inc. NYSE: CAVA, which is up 52% from its IPO price of $22. However, as you can see on the Cava Group chart, it's trading significantly lower than its August high of $58.10.

Small Chinese IPO boasts triple-digit return

The most successful stock this year, post-IPO, is probably unfamiliar to most U.S. investors. 

Golden Heaven Group Holdings Ltd. NASDAQ: GDHG, a holding company focused on the management and operation of amusement parks, water parks and other recreational facilities in China, has returned 477% since its April IPO. 

This is a tiny company with a market capitalization of $1.14 billion. Combined with being based in China, there's very little information available to U.S. investors. The fast uptrend is also a potential warning sign the stock could fall as quickly as it rose. 

Other notable 2023 IPOs include solar panel track manufacturer Nextracker Inc. NASDAQ: NXT, which is up 62% from its IPO price, and casual shoe company Birkenstock Holdings plc NYSE: BIRK, down 6.74%. 

Some big names on deck for 2024

As the broad market rallies, expect more companies to jump on the IPO bandwagon in the coming months. It's possible that mediocre debuts from the likes of Arm and Birkenstock could deter some companies, however. 

Long-anticipated IPOs from tech companies, including Stripe, Reddit and Databricks, are reportedly set to launch in 2024, as is China-based online fashion company Shein. According to reports, Shein has already filed paperwork to go public in the U.S., hiring heavy-hitter underwriters Goldman Sachs, JPMorgan Chase and Morgan Stanley.

Analysts say Shein could have one of the biggest IPOs in years.