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(Bloomberg) — The digital-health and advertising-technology sectors share a rich history of IPO disappointment, making this week’s planned debuts of physical therapy platform Hinge Health Inc. and TV ad software firm MNTN Inc. a test of whether the nascent recovery in the US first-time share sale market can keep going.
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Former initial public offering darlings such as SmileDirectClub, which shut down in 2023 after shares collapsed, and Teladoc Health Inc., whose stock is trading nearly two thirds below its listing price, offer cautionary tales. These wipeouts show the difficulty of technology startups aiming to make health-care cheaper and more efficient winning over investors. In the adtech sector, only a few companies — most notably Trade Desk Inc. — have found lasting success in a digital advertising landscape dominated by Alphabet Inc.’s Google.
Yet enticing valuations and insulation from trade conflict are helping Hinge Health and MNTN attract solid investor interest in their offerings, proving that, priced right, investors are willing to get behind listings from less-loved sectors.
“We’re seeing renewed IPO interest in sectors like digital health and adtech because they sit at the intersection of strong secular tailwinds and maturing business models,” said Mike Bellin, PwC’s US IPO leader.
“These companies are benefiting from increased demand for personalized, data-driven solutions and are now demonstrating the scale and profitability that public market investors are looking for,” Bellin said. “This activity reflects a broader shift in the IPO market — investors remain selective, but they’re ready to engage when the growth story is compelling and backed by fundamentals.”
Ahead of pricing later on Wednesday, both the Hinge Health and MNTN IPOs were multiple times oversubscribed, people familiar with the offerings have said. Hinge Health is guiding investors to price at the top end or above a marketed range, Bloomberg News reported earlier Wednesday.
Both deals are proving well-timed, with the recent broader market recovery and pullback in volatility measured by the VIX Index – Wall Street’s so-called fear gauge — falling below 20 in the past week before lurching back up on Wednesday. Other recent debuts have delivered meaningful post-IPO gains — a necessary precursor to greater activity levels.
Most notably, shares of CoreWeave Inc. have more than doubled since the AI data center operator went public in late March, salvaging what had seemed like a misfire of epic proportions when the size of the offering was cut and the stock initially traded underwater.