In mid-January, Nasdaq’s IPO Pulses for the U.S. and Stockholm suggested that initial public offering (IPO) activity would likely remain on an upward trajectory until midyear. This trend did persist through the first quarter, but significant changes have since occurred, impacting IPO prospects. The trends began to decline even before the announcement of tariffs on April 2. The market sell-off in April has contributed to notable slowdowns in both U.S. and Stockholm IPO Pulses, resulting in several companies delaying their IPOs.
The Nasdaq IPO Pulse indicates a likely reduction in U.S. IPO activity. In the first quarter of 2025, IPO activity continued its upward trend with 58 non-SPAC IPOs, marking the highest activity in over three years. However, there are signs of a potential slowdown. After reaching a 3¼-year high in December, the Nasdaq IPO Pulse has since declined to a 16-month low in March.
Historical comparisons were made to determine whether this recent weakness signals a real downturn in IPO activity. Unfortunately, genuine downturns and false alarms are indistinguishable in the initial months, though the deepening market sell-off in April suggests a downturn may ensue as soon as the second quarter.
Similarly, in Stockholm, the first quarter maintained its upward trend with eight IPOs, the second-highest quarterly figure in nearly three years. However, the Nasdaq Stockholm IPO Pulse also dropped to a 14-month low in March, indicating that the upturn may not persist.
Comparing this downturn to previous ones that indicated genuine decreases in Stockholm’s IPO activity or false alarms shows that, as of March, the downturn had already exhibited signs of a genuine decline based on its depth and diffusion. However, it resembled false alarms in terms of duration. A conclusive downturn requires all three elements—depth, diffusion, and duration—to align.
The increased uncertainty, driven partly by changing U.S. trade policy, became a key factor in the diminishing outlooks in the IPO Pulses through March. This uncertainty pushed U.S. risk levels to a record high in March, which had ripple effects internationally. Following the reciprocal tariffs raised on April 2, the global market responded with further uncertainty.
In terms of market returns, the MSCI Sweden and MSCI USA experienced corrections, both declining by over 10% since mid-February. Market returns influence IPO Pulses as they affect valuations, volatility, and sentiment. The decrease in market returns in April is expected to deepen the downturns in IPO Pulses.
In summary, IPO activity in the U.S. and Stockholm is anticipated to slow significantly in the coming months, influenced by historical changes in trade policy. The extent of these downturns will be clearer in the next update scheduled for July.
