Election, inflation uncertainties are weighing on IPO market

Childcare provider KinderCare Learning Companies (KLC) is one of nine companies pricing their IPOs for this week. However, Rainmaker Securities managing director Greg Martin believes there could be trouble ahead for the IPO market, and joins Asking for a Trend to lay out his case. Martin notes that IPO activity has increased this year after declining in 2022 and 2023. Looking forward, he sees the election as a "big wet blanket" for stocks, especially those in the tech sector. "I think we will start to see the big backlog that we have waiting for the uncertainty to leave. The political uncertainty we discussed, the [interest] rate uncertainty. So even though we had a rate decline, we're not sure whether we're going to have another decline or whether we're going to hold rates constant," Martin tells Yahoo Finance. "We have an inflation print, we have the geopolitical uncertainty. So there's still a lot of uncertainty. And that, to me, is the reason the IPO market hasn't reopened in the fashion that we would have expected by now,"  While many companies like OpenAI hold off on IPOs, Martin notes that they are in a position where they've raised billions of dollars in capital and, therefore, don't feel pressured to go public. "I think for a good subset of those, being public is kind of a luxury that when the markets are buoyant and when they see multiple expansion or get comfortable with some of the uncertainty we talked about, maybe they will go public. But why have the headache of being a public company when you get what you need as a private company?" he explains. Watch the video above to hear what Martin also has to say about demand trends in the AI landscape. To watch more expert insights and analysis on the latest market action, check out more Asking for a Trend here. This post was written by Melanie Riehl