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Rivian’s blockbuster initial public offering last week pushed the total exit value for U.S. public-market listings this year beyond an unprecedented $1 trillion marker, a record that more than doubles 2020 levels, according to data compiled by PitchBook.
The PitchBook data includes traditional IPOs as well as direct listings and special purpose acquisition vehicles, noting that 17% of this year’s collated valuation figure came from SPACs.
The $1 trillion figure helps quantify just how hospitable the public markets have been to new entrants and builds a greater opportunity set of equities for investors to trade. However, it’s also a data point that may help bolster the case for those who are concerned that some of the recent IPOs epitomize a dislocation between valuation and fundamentals.
Late-stage growth — both among private companies and newly public ones — represents a pocket of froth, according to Dipanjan “DJ” Deb, the CEO of Francisco Partners, a tech-oriented buyout firm.
“Many of the unicorns today are actually disrupting the world and deserve their valuations,” Deb said in an interview for CNBC’s Delivering Alpha Newsletter. “But probably 70-80% of them will have some sort of day of reckoning. They’re not all going to disrupt the world, and people are conflating growth and quality in late stages of a bull market.”
Rivian’s upsized initial public offering last week added about $67 billion to the total, and since then, it has more than doubled, trading around $150 billion. (Though the volatile shares were off by 14% in morning trading Wednesday.)
Still, the electric-vehicle maker notched the second-highest valuation for a listing this year, after Coinbase debuted with an $85 billion valuation in April. The crypto exchange has added roughly $5 billion in market cap since that time.
In addition to combined valuation, U.S. equity issuance has also notched a record. So far this year, $490 billion has been raised across IPOs, follow-ons, convertible bonds and SPACs, a 9% jump from 2020 levels, according to Goldman Sachs.
“With equity valuations at elevated levels, we expect the environment will remain favorable for equity issuance in 2022,” the firm said in a recent note.