IPO Market on Pace for One of Its Best Years on Record
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Your Money Briefing.
Money and Market Stories from The Wall Street Journal. I'm J.R. Whalen in New York. Remember when some on Wall Street were writing off the IPO market? Well, IPOs are back in style again. How much in style? We'll run the numbers in a moment. First, these money headlines. With unemployment at historic lows, more companies are paying for workers they used to get for free, like unpaid interns, in order to ensure a pipeline of young talent for entry-level positions. In some cases, hiring managers are relaxing standards to fill open seats. In 2012, about half of all internships were unpaid. Since that peak, unpaid internships have steadily declined, hitting 43% in 2017. And the government also has a voice in the internship market.
The Labor Department says for an unpaid internship to be legal, it must provide an experience applicable to the student's education and that their work should complement, not displace, the work of a paid employee. An American factory activity accelerated for the second straight month in June. signaling momentum in the U.S. manufacturing sector. The Institute for Supply Management on Monday said its manufacturing index rose to about 60 in June. Anything above 50 indicates activity is expanding across the manufacturing sector. Economists surveyed by The Wall Street Journal had expected a reading of about 58 for June. This is your money briefing from The Wall Street Journal. Welcome back, everybody. 2018 has meant volatility, wild swings and some uncertainty on Wall Street.
But what is certain this year is the IPO market appears to be back on its feet. And Wall Street Journal reporter Maureen Farrell is here to discuss. So, Maureen, it was just two years ago. People wondered if the IPO market would ever come back to life.
Yes. I mean, it was one of the lowest years on record two years ago when the stock market was looking pretty good. Volatility was fairly low. There are these questions, why aren't companies going public? And that's clearly changed dramatically this year.
Can you give us an idea of how strong the IPO market has been this year so far?
Sure. So in the U.S., on U.S. exchanges, we've seen 120 companies go public, raising about $35 billion. And that's the fourth best year on record. That goes back to 1995. That is coming back to life. It is.
Wow.
It's the highest volume since 2012. And you might remember that year was when Facebook had gone public. So this year, unlike that, we don't have one massive IPO, just a lot of different ones from all different industries, all different sizes.
And it's the overall health of corporate America that has a lot to do with this burst of activity.
Definitely part of it. And a lot of these companies have been around for a long time or they once were public and they were taken private. Now they're coming back out. So it's not I mean, there have been a bunch of different catalysts for this. It's not that necessarily these companies have been rushing to market. It's that they've been getting ready and now feels like the right time for them.
You know, you raise a good point in your story, and that is that companies aren't fearing that their public valuations might fall below what they had in the private markets. Can you just explain that?
Sure. So that was one big thing that was keeping companies on the sideline in 2016. We saw this rush of money into the private markets, a whole phenomenon we'd never really seen before. Mutual funds were putting money into companies like Uber, Airbnb, pushing up their valuations. They had so much money that they didn't need to tap the public markets. And they were getting these really off-the-chart valuations, not just Uber, you know, smaller companies too. So there was a concern if they were to go out that they would go out below their last private valuation and investors would get hit. So that was keeping companies from going public. But we've seen a lot of companies come out this year and do really well, whether it's Dropbox or DocuSign.
These are these highly valued tech companies that,
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