The IPO market has not roared back in 2024 as many investors hoped it would — not yet, at least. Elevated interest rates (this week’s 50 bps rate cut notwithstanding) and uncertainty related to the U.S. election have prompted many companies to stay private and wait for better market conditions.
But a handful of companies did go public this spring. Enterprise rewards platform Ibotta, which builds the backend rewards program infrastructure for enterprise clients like Walmart and Exxon, was one of them, debuting on the NYSE on April 18. Its IPO priced above its initial price range at $88 a share and debuted at $117 a share. It’s currently trading at $63 a share with a $1.7 billion market cap.
Ibotta’s CEO, Bryan Leach, told TechCrunch that five months after the IPO, he doesn’t regret taking his company public this year. Going public requires months of planning, and he thinks companies trying to time the market are making a “huge mistake.”
“Who knows what the [Federal Reserve] will do?” Leach said. “[Bankers say] it’s always better to wait, but you never know what will happen when you wait. At the end of the day, it’s not a destination, it’s a phase.”
Numerous companies that were expected to go public in 2022 or 2023 are still waiting on the sidelines. Many of these companies are sitting on large valuations that they gained from funding rounds during the boom days of 2021 and they would have to suffer a haircut to go public. There were 310 IPOs in the U.S. in 2021, according to PitchBook data. This has dropped sharply since. There were 80 in 2022, 85 in 2023 and 37 through the first half of 2024.
Leach admitted that some people consider the fact that Ibotta’s stock has dropped nearly 50% since its IPO as a sign that going public at this time wasn’t the right decision, or they might say that the company should have waited. Still, he feels it is too early to draw such conclusions, pointing to how Instacart’s stock is now trading close to its debut price — it hit a 52-week high today — a year after its IPO.
“Things are going great,” Leach said. “We are the largest tech IPO in Colorado history. The stock has gone way up, and gone down, and that sort of settles in over the course of the year. From a company perspective, we’ve been pleasantly surprised by how much value we got out of being a public company.”
Public companies also have an air of legitimacy around them, and Leach said that leverage is useful when it comes to nabbing potential enterprise customers. He said the company’s recent deal with Instacart may not have happened if Ibotta were still private.
“They trust us,” Leach said. “We have a certain amount of legitimacy. They know we have the resources. They can look at our finances. They can see we don’t have any debt. There is a level of comfort that [being a public company] provides.”
He added that the same level of legitimacy applies to hiring, too. Ibotta is no longer offering stock options tied to a private valuation given by investors with no downside protection, and Leach said that makes the company a more attractive option for talent.
Leach said companies on the fence about doing an IPO shouldn’t try to time the market, but they should wait until they are ready to be a public company.
Going public this April was not the company’s first choice, either. During the SPAC and IPO craze of 2020 and 2021, Ibotta’s investors began asking it to go public, and so the company hired bankers and wrote up an S-1, an SEC document that kicks off the IPO process. It was ready to set out on an IPO roadshow in fall of 2021 but decided to hold off.
Ibotta had landed a large deal with Walmart to run a white-label version of its rewards program at the time, Leach said, but he wanted to be able to prove the deal was actually working before going public. Not everyone was pleased with the company’s decision to wait.
Still, Leach feels it was the right choice. Waiting until 2024 allowed Ibotta to go public with six quarters of profitability behind it and get its finances in order. Other late-stage companies in the same boat, he thinks, shouldn’t wait around for a “better” market.
Investors don’t seem to mind companies waiting it out — at least they aren’t expressing otherwise publicly. But the IPO market is bound to open again eventually. Interest rates have started to go down and there is an increase in rumors surrounding companies hiring bankers to start the IPO process. Companies may be done waiting come 2025.
