IPO activity in Q3: Beginning of a thaw?

Andrew AldenCFA, Director of Quantitative Research, Forge

This was really interesting.

After quite a few quiet months for IPOs, it certainly felt like a lot was riding on these IPOs. And I think most people would say that they were broadly successful. The companies managed to raise significant capital, and many investors will now have all the liquidity benefits of the public market. But success also varies depending on who we're talking about and when they made their investments in these companies.

One thing I really like about some of the data we have and the charting we can do at Forge is that we can look at how prices on these names moved prior to the IPO as well as after it.

This not only can help us develop expectations around the price the company may list at, but it also can help us see what the historical investment opportunities look like. Looking here at Instacart, we can see that an investor buying shares at the start of the year could have made a 34.8% return through the close of the first day of public trading. We also see the path of pricing and how it picked up throughout the year. First, as the company announced a new internal valuation and later in August when Instacart announced its plans to go public.

In 2023, Instacart notably outperformed both the Forge Private Market Index as well as its own transportation sector. In the case of Instacart, the Forge price right before the IPO was actually very close to the eventual first day closing price. But of course, this isn't always the case.

Turning to the Klaviyo Forge price chart, here we're looking at the price-performance of Klaviyo shares since the start of 2022. You can see the company's shares perform similarly to both the Forge Private Market Index as well as the enterprise software sector.

And both were down, and all three were down considerably since early 2022. However, in hindsight, this presented opportunity. The company's shares rose over 100% from their 2023 lows and 82% from their last private market Forge price to their first public closing price. Both these names were holdings in the Forge Private Market Index and made strong returns contributions to the index in 2023.


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