Breakingviews: Market jitters hand IPO wannabes a thorny dilemma

Capital-markets bankers started 2025 betting on an initial public offering boom. Now they’re facing a plot twist. Monday’s market selloff and surging volatility may give IPO hopefuls like Klarna, CoreWeave and others pause for thought. The headache for companies and advisers alike is that the wobbles may persist, which could force capital-hungry issuers to go ahead and take the plunge anyway.

The year started off well. The S&P 500 Index hit record highs in February. Companies have raised a total of $7.1 billion on U.S. exchanges so far in 2025, the highest year-to-date total since 2021, per LSEG data. But the sentiment shifted drastically in recent days, as investors digested signs of slowing growth and the reality of U.S. President Donald Trump’s tariff policies.

The S&P was down 1% by mid-morning New York time on Tuesday, following a 3% fall on Monday. The CBOE Volatility Index or VIX, sometimes known as Wall Street’s “fear gauge” hit 29, or double its mid-February levels. IPO bankers told Breakingviews that a reading above 20 usually starts to bring floats into question. And the major share sales that got away earlier in the year are performing badly: Venture Global, a liquefied natural gas producer, and Thoma Bravo-backed SailPoint are roughly 60% and 15% below their respective IPO prices.

Klarna’s Sebastian Siemiatkowski, CoreWeave’s Michael Intrator and the bosses of other aspiring debutants may press on with their filings and roadshows, hoping that markets stabilise before they pull the trigger. The Swedish pay-later group, for example, has so far not decided to pull the plug, according to a person familiar with the matter.

But there’s every reason to think that the jitters will continue. Valuations are stretched: the S&P’s 12-month forward price-earnings multiple has been above 20 since early last year. The only other times in which the benchmark traded beyond those levels for a sustained period were in the dot-com bubble and heady days of the pandemic market boom, according to LSEG Datastream figures stretching back to the 1980s. Nor does Trump’s trade war seem likely to die down quickly.

Continued choppy markets would present a dilemma for cash-hungry issuers. Cloud computing group CoreWeave, for example, was planning to raise $3 billion, Reuters reported in November. Buyout barons like Blackstone, Carlyle and Hellman & Friedman – who were lining up a possible $50 billion IPO of medical supplies provider Medline according to a Reuters report – need to get cash back to their investors to kickstart a new fundraising cycle. That makes it harder to wait. The added twist is that stock issuers who need the money most may also be subject to the most intense market scrutiny. The supposed boom year of 2025 is rapidly turning into anything but.