Investors hoping a wave of new tech stocks would invigorate the market have found themselves repeating the mantra of long-suffering baseball fans: Wait till next year. But the IPO market entered 2025 with optimism that IPO stocks can break out of a three-year slump. And some buzzy unicorn companies are busy readying offerings.
"The recipe is there for a strong year — or at least a relatively strong year compared to the last couple years we've seen," Kyle Stanford, lead U.S. venture capital research analyst at research firm PitchBook, told Investor's Business Daily.
While the first couple months of 2025 saw no blockbuster action, that could change soon. Cloud-computing provider CoreWeave is considering filing for an IPO at a valuation of more than $35 billion "within the week," Bloomberg reported late Wednesday, citing anonymous sources. The Nvidia-backed startup rents computing power to enterprises with a focus on AI. So the IPO could offer a test of the market's appetite for new AI stocks.
Investors will be watching for signs that a big IPO stock can jump-start the market. Optimism for new listings has perked up as technology trends like artificial intelligence, financial technology and crypto have gained steam. IPOs could prove even more attractive if the U.S. stock market is strong and the Federal Reserve cuts interest rates further.
Is The IPO Market Coming Back?
On the other hand, many top stocks have pulled back in recent trading amid concerns about fading consumer confidence and uncertain trade policy. Meanwhile, leading startups like SpaceX, OpenAI and Stripe have raised huge sums of private capital, delaying the need to go public.
Investors had hoped to break the IPO logjam last year, but there was little notable action outside the debuts of a few companies like Reddit, Astera Labs and ServiceTitan.
Tech IPOs have had a rocky ride since the pandemic hit in 2020. The tepid activity in the past three years has set the bar for improvement in 2025 "very, very low," PitchBook's Stanford said.
There was a boom in 2021, which saw total new offerings from tech companies in the U.S. and Europe more than double to 215, according to S&P Global Market Intelligence. But then investors hit the brakes in 2022. That was largely in response to inflation and global uncertainty brought on by the Russian invasion of Ukraine.
Higher interest rates to battle inflation have kept a lid on new IPO stocks since then, particularly from venture-backed tech startups. There were 51 U.S. and European tech and media IPOs in 2022, according to S&P data, followed by just 25 in 2023 and 26 in 2024.
IPO Market Outlook For 2025
For all sectors across U.S. markets, there were 146 U.S. IPOs 2024, which raised a cumulative $29 billion, according to Renaissance Capital. That's an improvement from the $19.4 billion raised in 2023 but nowhere near the record $142.4 billion raised by companies going public in 2021.
The steep rate increases that started in 2022 turned many investors against riskier bets on emerging tech companies. That's one reason why venture investment into startups slowed significantly from the record levels of 2021. And for companies that raised venture funding during that bull market, the downturn meant it was much more difficult to find new investment at a higher valuation.
"That decline (in valuations) has held many companies back from raising new capital and certainly from tapping the public market," Joe Endoso, president of investing platform Linqto, told IBD.
With expectations of further rate cuts, most market forecasts expect more IPO market activity in 2025. Renaissance Capital forecasts between 155 and 195 U.S. IPOs across all sectors, which would mark a return to pre-pandemic levels.
Trump Policies Could Affect The Flow Of IPO Stocks
Another factor to watch: The new administration in Washington, D.C. Trump's reelection was welcomed by investors with a huge rally in early November. With Elon Musk acting as a key advisor, some observers are hopeful Trump will pursue policies to boost tech and the stock market in general. That could help the IPO market.
Nasdaq Chief Executive Adena Friedman told Yahoo Finance last month that uncertainty around the election itself slowed some new listings in the back half of last year.
"The IPO environment was getting better as we went through 2024," Friedman said. "But it's been three years of a pretty challenging environment. With the new administration coming in, there's definitely, I would say, more certainty that there could be a really interesting and exciting environment for this year."
On the other hand, Trump's push for additional tariffs on China and for tariffs on Canada and Mexico could introduce fresh uncertainty.
"We will see how tariffs are implemented and if they stick around a long time, but there is the potential for (stock) market volatility, and that will be bad for IPOs," Stanford told IBD.
Tech Startups In The IPO Pipeline
Some big name startups appear ready to make the jump.
CoreWeave could offer a big test. The AI-focused cloud provider is looking to raise about $4 billion from its listing, according to the Bloomberg report. CoreWeave could not be immediately reached for comment.
Following reports late last year that CoreWeave had hired bankers for an IPO, a Deutsche Bank analyst said the offering "stands out like a lake in a desert."
Buy-now-pay-later firm Klarna announced it filed early paperwork to ready an IPO in November.
Chime, a fintech that offers bank accounts and other services, filed confidentially for an IPO in December, Bloomberg reported.
But actual tech IPO activity has been light in the first few months of the year. Car-sharing company Turo pulled its IPO filing on Feb. 13, telling TechCrunch in a statement that it is "not the right time."
The largest tech debut so far featured the private-equity-backed cybersecurity company SailPoint. SailPoint completed its IPO Feb. 13, raising $1.4 billion. The Thoma Bravo-backed company is a competitor to Okta and CyberArk, among others.
IPO Market Awaits A 'Large Backlog' Of Tech Unicorns
Meanwhile, the IPO slowdown for tech companies has created a "large backlog" of so-called unicorn startups with private market valuations of more than $1 billion, Stanford notes.
Typically companies valued above that level start strategizing for an IPO or another exit that can provide fresh cash, along with returns to their investors and employees compensated with shares. More than 600 active venture-backed U.S. startups would generally be expected to pursue an IPO, based on their valuation and age, according to PitchBook data. That's up from 288 at the end of 2021.
The median age of unicorn startups is 8.4 years from their first venture capital round, up from 6.4 years in 2021, according to PitchBook.
Which Unicorn Companies Might Go Public?
But despite the backlog of unicorn companies, a sudden rush to go public is unlikely. Jai Das, cofounder and president at the enterprise tech-focused venture capital firm Sapphire Ventures, expects only the "tippy-top companies" will test the IPO market in the next year.
"When the IPO market first opens up, the bar is much, much higher," Das said.
In the enterprise technology world, that means startups with annual recurring revenue of $400 million to $500 million, Das adds. They also should be at least close to the Rule of 40, which refers to software companies whose sales growth rate added to their profit margin is above 40%.
"If those (first) companies do well, I think there's more appetite from the public, and the market then opens up a little bit," Das said.
Other private companies could pursue a merger or be acquired in deals that provide venture investors with the type of returns — or a so-called exit — that have been hard to come by over the past three years.
"LP (limited partners) are all asking for exits," Das said. "They want to get money back from the previous funds, so they can fund the upcoming funds. So there will be a push to sell from existing investors."
Odds That High-Profile Unicorns Will Become IPO Stocks
But some of the most valuable unicorns have enough cash that they can wait. Late-stage venture investment rounds and tender offers that allow some employees to cash out are keeping top startups private longer.
Jay Ritter, an emeritus professor at the University of Florida's Warrington College of Business, says companies have three main reasons for going public: raising cash, providing liquidity for their stock and to have currency for stock-financed acquisitions.
"The first two reasons have become less important than they used to be," Ritter told IBD. "Cash is available for private startups due to the large supply of VC money, as well as investments in private companies by some mutual funds, such as T. Rowe Price's growth funds."
What Are The Most Valuable Unicorn Companies?
Musk's SpaceX is the most valuable private startup in the world, according to CB Insights' unicorn tracker. The company completed a tender offer in December that valued it at $350 billion, according to a Bloomberg report.
ChatGPT creator OpenAI, meanwhile, raised $6.6 billion from venture investors in a deal that valued the company at $157 billion. The Wall Street Journal recently reported that OpenAI was in talks with SoftBank on an investment that would raise the startup's value to $300 billion.
Stripe also is a regular target of IPO speculation. The fintech payments provider is among the most valuable startups in the world. But the company on Feb. 2 announced it completed a tender offer at a private valuation of $91.5 billion.
"We've always been consistent that we are not in a rush to go public, and we have no immediate plans," Stripe cofounder John Collison told the Wall Street Journal.
Databricks, a software firm considered a major AI player, raised $10 billion in January at a $62 billion valuation. Investors included Meta Platforms. Databricks Chief Executive Ali Ghodsi said at an industry conference in December that 2025 would be the "earliest theoretical possibility of an IPO."
Reddit, Rubrik Stocks Were Strong After 2024 IPOs
One positive signal is that some high-profile tech IPO stocks performed well, at least until this year. Analysts with Renaissance Capital underlined the significance of this trend in their 2024 annual recap, saying that "impressive gains from Reddit and others by year-end signals a resurgence ahead."
Reddit has gained more than 200% from its first-day closing price – despite a recent slump that followed its fourth-quarter earnings report.
Data security startup Rubrik has rallied 70% since its April IPO.
Astera Labs has slumped more than 40% since the start of the year but remains about 22% above its first-day closing price after its March 2024 IPO.
ServiceTitan popped 42% from its IPO price in first-day trading on Dec. 12 but has fallen about 9% below that level in trading since then.
Focus On The IPO Market
After its rocky recent run, the S&P 500 is up a fraction year-to-date. Ritter says the stock market's strength will be the most important factor for new IPO stocks.
"The most important factor affecting IPO activity this year is what happens to the stock market, especially the valuation of growth stocks beyond the Magnificent Seven," Ritter told IBD. "If the market goes down, IPO activity will not pick up. If the stock market goes up, IPO activity will continue to increase."
