Blog — August 18, 2025
Strong First Half of 2025 for U.S. IPOs
The first half of 2025 was the best first half for U.S. IPO issuance by number of deals after a 227 deals in 2021. It’s worth noting that several rounds of central bank stimulus and very low interest rates made for a goldilocks environment for IPOs in 2021. It's very difficult to predict if or when the same confluence of factors will reappear, so it's not fair to compare the most recent four years’ issuance given that the post-COVID restart of the economy was a very unique time in history.
It is encouraging to point out that U.S. IPO volumes doubled each first half of the year from 2022 until 2024. That trend stopped in H1 2025, with volumes down 9% versus the first half of last year.
On the positive side, deal count this first half came in at 102 deals versus 78 last year. So overall, very good sentiment going into the second half. It’s worth mentioning that back in December 2024 there was already a significant amount of optimism for this market. But admittedly, the concerns driven by uncertainty around tariffs did slow down issuance during Q1 of this year.
Please note that the below graph and everything going forward does not include SPACs. This is just purely conventional IPO.
H1 2025 U.S. IPO Day One Performance Remains Elevated
The chart below shows the first day performance of every U.S. IPO during the first half of 2025. One of the biggest predictors of future IPO activity is the recent performance of IPOs and performance was very strong out of the gate starting with deals issued in late-May thorough quarter end. The $1.2 billion Circle IPO was a standout during the first half after increasing +168% in the first day of trading and continued to perform well afterwards.
Optimism is continuing to improve going into the second half of this year with Figma pricing its $1.2 billion IPO on July 30 with shares increasing 250% in price during the first day of trading.
The below chart shows the weighted average U.S. IPO day-one performance each first half over the past 10 years, with 2021 issues showing the best performance averaging a 29.2% increase of share price on the first day of trading. However, this year is second best during the period at a 27.5% increase on a weighted average basis versus 15.0% during the first half of last year. This should be a good sign for the IPO market going into the second half.
H1 U.S. IPO Performance Currently Outperforming Last Year
The chart below illustrates a model portfolio that invests in every single share of every U.S. IPO on the day of the deal priced and simultaneously buys an equivalent market value of the S&P 500 on the IPO’s pricing date. If you bought all the shares or simply a pro rata share of every U.S. IPO during the first half of this year, the model portfolio would have returned 75.9% versus by the S&P equivalent at the time of each IPO of only 4.9%.In comparison, H1 2024 IPOs ended the first half 16.5% higher versus the S&P 500 model portfolio’s 7.1% price return.
To be fully transparent, a big part of this year's returns so far was driven by two large IPOs. If you exclude Circle, you're up about 43.5% on the year, and if you also exclude CoreWeave then the portfolio would be a more modest 10.0% on the year, but still outperforming the S&P 500 on a weighted average basis by about 5%.
IPOs under $100 million in proceeds came under a lot of pressure last year and had performed very poorly on average. The below chart shows the 2024 and 2025 first half performance of IPOs by size. The data highlights that $50-100 million U.S. IPOs ended the half 45.3% higher on average this year versus -28.5% during the same period last year. Larger IPOs are also performing better this year, with the $500 million to $1 billion bucket 44.0% higher this year compared to 25.5% last year and the greater than $1 billion 159% higher compared to 22.2% in H1 2024.
At the end of the day, what do investors care most about? Value creation. Among the two charts below, the top chart shows the year-to-date daily value creation of this year's IPOs in the first half of 2025 and the lower chart is the equivalent for the same period in 2024. The charts highlight the significantly greater value creation from this year’s IPOs, with most of it concentrated in the technology sector. The top chart also indicates that most of the price depreciation this year has come from energy sector IPOs (green bars).
H1 2025 Technology and Aerospace and Defence U.S. IPO’s Outperform
The charts below show the total H1 2025 IPO market value on top and price performance on the bottom by sector as of June 30. Both the current market value of IPOs from the technology sector at $13.6 billion and share prices increase of 246.2% were the highest among all the major sectors. In terms of total market value, technology was followed by health care at $2.89 billion and 22.2% returns and industrials at $1.9 billion in market value and up almost about 70% on the year. The data clearly indicates strong performance for most of the sectors, with only the energy (-32.5%) and materials (-20.7%) sectors lower during the first half.
There are several highlights when looking at performance at the subsector level in the chart below. The 211.3% price increase across the application software subsector is largely driven by Circle’s 485% price increase as of June 30. The internet services and infrastructure subsector’s performance were solely driven by CoreWeave’s 307.7% price return. In the aerospace and defence sector, Karman Space and Defence share priced increase 129% since the IPO and drove most of the aerospace and defence sector's 88.4% return. Lastly, Hinge Health, 62% return was the main driver for the health care services sector.
In summary, the strong performance of U.S. IPOs during the first half of 2025 could encourage private companies to ride the wave of positive IPO sentiment to go public during the second half of 2025. The biggest risk to issuance for the remainder of the year will continue to be unexpected shifts in governmental policies across the major global economies that disrupt supply chains and potentially fan inflation.