Heads I Win, Tails You Lose

Wall Street firms raked in record IPO fees in 2021, even as Main Street investors incurred the worst performance for newly public companies in years. It wasn't just a good year for investment banks, it was a great year: according to Dealogic, Goldman Sachs, JPMorgan, and Morgan Stanley among others, combined to register IPO revenue of about $9.8 billion, including special-purpose acquisition companies, or SPACs. The IPO revenue total compares with $4.995 billion from 2020, $2.1 billion in 2019 and $1.95 billion in 2018." And it wasn't just a few mega-deals driving revenues, both the dollar volume of deals and the number of IPOs, over 1,000, were at record levels.

Yet, for the average investor buying into the fantasy of Silicon Valley's unicorns, things turned out very differently. Over two-thirds of 2021 IPOs are underwater. Renaissance Capital's IPO ETF was down 9% and the SPAK ETF 24% on the year, even as the broader market had an excellent year, including the NASDAQ. (Click to enlarge)

Source: Yahoo Finance, Mantabye

While Wall Street brought new companies to the public steadily throughout the year, IPO returns, and certainly that of SPACs, seem to have peaked sometime in early Q1 2021. Oversupply always dilutes quality, but how many of 2021's grow-at-any-cost, cash burning companies were really viable in the first place? Then again, that's the game.

                                                                             Source: Yahoo Finance, Mantabye