Morgan Stanley banker sees 10 to 15 more tech IPOs in 2024, and a ‘better year’ in 2025

Following
a
long
period
of
waiting,
“the
IPO
market’s
back.”

That’s
according
to
Colin
Stewart,


Morgan
Stanley’s
global
head
of
technology
equity
capital
markets.
In
an
interview
with
CNBC’s
“TechCheck”
on
Monday,
Stewart
said
10
to
15
more
tech
companies
could
go
public
before
the
end
of
2024,
with
an
even
“better
year”
in
store
for
2025.

“It’s
been
a
long
two
and
a
half
years,
where
we’ve
had
really
nothing,”
Stewart
said.
Recent
initial
public
offerings
have
priced
high
and
traded
well,
which
“bodes
well
for
the
future,”
he
added.

The
lull
began
in
2022,
when
soaring
inflation
and
rising
interest
rates
pushed
investors
out
of
risk,
slashed
tech
valuations
and
led
many
tech
companies
to
delay
their
plans
to
go
public.
It
was
a
sharp
contrast
to
the
prior
two
years,
which
saw
a
record
number
of
deals,
including
some
at
astronomical
revenue
multiples.

The
IPO
market
cracked
open
in
September,
with
the
debuts
of


Instacart
and


Klaviyo.
But
the
first
real
signs
of
momentum
came
last
month,
as


Reddit
became
the
first
IPO
for
a
major
social
media
company
since


Pinterest
in
2019
and
data
center
connectivity
chip
company


Astera
Labs

rocketed
on
its
first
day
of
trading.

Both
stocks
remain
well
above
their
IPO
price,
with
Astera
up
about
145%
as
investors
pour
money
into
all
things
tied
to
artificial
intelligence.

Morgan
Stanley
was
the
lead
banker
on
the
Reddit
and
Astera
IPOs,

positioning
itself
to
collect
roughly
$37
million
in
total
fees.

Wall
Street
rival


Goldman
Sachs
led
the
latest
venture-backed
tech
IPO
last
week.


Rubrik,
which
develops
data
management
software,

jumped
16%
in
its
New
York
Stock
Exchange
debut.

Stewart,
who’s
had
a
hand
in
some
of
the
largest
offerings
of
the
last
few
decades,
said
it
usually
takes
six
months
to
take
an
IPO
to
the
finish
line.
That
means
companies
currently
considering
an
IPO
are
likely
to
hold
off
until
2025
to
avoid
intersecting
with
the
U.S.
presidential
election
in
November,
he
said.

As
for
valuations,
Stewart
said
the
market
has
retreated
from
the
peak
days
of
2021,
and
multiples
in
software
and
other
parts
of
technology
are
now
back
to
levels
seen
in
2018
and
2019.
Stewart
described
2021
as
an
“amazing
year”
but
also
“exhausting.”

“What’s
happened
in
the
last
six
to
12
months
is
that
the
market
has
gotten
more
comfortable
with
paying
for
growth
again,”
Stewart
said.
“We’re
not
back
to
the
levels
of
2021,
but
we
are
getting
a
fair
price
for
growth.
And
I
think
at
those
prices,
you’re
starting
to
see
companies
say,
‘You
know,
it’s
actually
not
bad
to
be
a
public
company.'”

Still,
the
most
valuable,
late-stage
companies
have
yet
to
hit
the
exits.
That
list
includes


Elon
Musk’s
SpaceX
along
with
Stripe
and
Databricks.

While
Stewart
said
he’d
“love
to
take
them
public,”
he
acknowledged
that
the
challenge
for
the
bigger
names
is
“they’ve
got
scale,
they’ve
got
growth,
investors
are
giving
them
lots
of
capital”
and
they’re
investing
toward
the
future.

“Right
now
the
IPO
is
not
on
their
near-term
horizon,
unfortunately,”
he
said.
“But
when
it
does
come
they’ll
be
blockbuster.”