Despite a temporary surge in stock markets following President Donald Trump’s announcement to pause planned tariffs on most countries, investment bankers and analysts remain cautious about the IPO (Initial Public Offering) market.
The volatility of public markets, driven by fluctuating tariffs, especially those targeting China, has hindered companies like Klarna, StubHub, and Hinge Health from moving forward with IPOs.
While the S&P 500 experienced its largest daily gain since 2008 on Wednesday, it dropped nearly 4% the following day, underscoring the market’s instability.
Experts cited the volatility index (VIX), which soared to 54 on Thursday, as a key indicator discouraging IPO activity. Typically, a sustained VIX level below 25, or ideally under 20, is needed to rebuild investor confidence.
As a result, many IPOs may be delayed until later in the year, pushing companies to seek alternative liquidity avenues such as private secondary markets, which are expected to see increased activity amid prolonged public market uncertainty.
The IPO freeze is not just a domestic issue. Internationally, the repercussions of the “Liberation Day” tariffs announced by President Trump on April 2 have been significant.
These tariffs, which include a baseline 10% tariff on imports from most countries and higher rates for specific nations, have led to a global stock market crash and retaliatory measures from affected countries.
For instance, China announced retaliatory tariffs of 34% against the United States, starting on April 10.
The uncertainty surrounding these trade policies has made investors wary, further dampening the appetite for new public offerings.
Companies are now exploring alternative funding avenues, such as private secondary markets, to meet their capital needs during this period of heightened market instability.
As the global economic landscape continues to shift, the IPO market’s recovery will likely depend on the resolution of trade tensions and the stabilization of financial markets.
