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IPO

Stocks of recent tech IPOs surge at pace not seen since 2021

Recent IPOs like Rubrik and Astera Labs have grown more than 100% year-to-date

The tech IPO market is blocked up by startups that are scared to go public.

But if stocks are anything to go by, they have little to fear. PitchBook’s VC-backed IPO index rose 66% through Dec. 12 and is at its highest level in three years.

A good chunk of that growth has been driven by recently IPO’d companies: Reddit‘s stock price is up 240% during the period, and both Rubrik and Astera Labs have risen more than 100%. Investor bullishness on the AI opportunity and increased confidence driven by falling interest rates have accelerated tech stock growth.

Reddit, in particular, has had a stellar few months. In its Q3 earnings, Reddit achieved GAAP profitability for the first time as a public company and reported 68% year-over-year revenue growth to $348 million.

Strong performance in public equities has the potential to open the floodgates for more tech IPOs. Many late-stage founders have been waiting in the wings for the last two years for valuations to hit the high-water mark they set back in 2021. Founders have been reticent to go public below their last valuations and swallow the dilution that would follow.

Some, like recently listed software company ServiceTitan, had no choice but to go public below their last price because of the terms of their last private financing round. But even in ServiceTitan’s case—not yet profitable and debuting at a down round—the public markets were immediately sold. Its stock popped 42% in its IPO debut.

The Nasdaq, Dow and S&P 500 all took a dive on Wednesday after the Fed announced it had scaled back its plans for interest rate cuts for 2025. They rebounded modestly on Thursday morning.

More IPOs will be welcome news for GPs after a record-long IPO drought that left many LPs starved for liquidity. The strong performance in public equities could also prompt institutions to offload their holdings if they anticipate a dip in 2025.

Earlier this year, CalPERS boosted its private equity target from 13% to 17% and private credit from 5% to 8%: the equivalent of a $34 billion boost.

Despite the bullish moves in tech stocks, some companies will still be sitting on their hands for a while. DataBricks, Revolut and SpaceX have all reportedly held tender offers in the last quarter, an indicator that they intend to remain private.

Featured Image by Megan Woodard / PitchBook News

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  • rosie-headshot.jpg
    Rosie Bradbury is a senior reporter covering startups and venture capital for PitchBook News. Based in New York, she previously reported for the Bureau of Investigative Journalism, Business Insider and Wired. Rosie studied history and politics at the University of Cambridge.
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