Rivian electric trucks are parked near the Nasdaq MarketSite building in Times Square on November 10, 2021 in New York City.
Michele M Santiago | Getty Images
Tech stocks were hammered across the board in 2022. The downdraft was especially brutal for companies that debuted in the market in 2021.
Of the 53 tech-related companies followed by CNBC and listed on the stock exchange last year via an IPO or direct listing, all but three are now trading below their offer price (for IPOs) or opening price. (for direct quotes).
More than half collapsed by at least 50%. This includes some of the biggest names, such as trading apps Coinbase Other Robin Hoodelectric car manufacturer Rivianocloud software provider UiPath and fin-tech company Marchetta Other toasted bread. They have lost over 60% of their value.
The sell-off began late last year as soaring inflation and concerns about rising interest rates pushed investors out of riskier assets with the highest multiples. The decline intensified in February following the Russian invasion of Ukraine and at the end of last week it moved closer to panic selling territory after the market digested Federal Reserve comments and a half point increase at its benchmark interest rate.
IPOs are the last thing investors want to touch right now. The new issue market has been dry during the first four or more months of this year and there is nothing noteworthy in the tech IPO calendar for the duration of the second quarter.
Companies aiming to close in the first half of 2022 have no appetite to continue on this path, as most of them raised risk finance at valuations that reflected where the market was in the past two years, as the technology was in. tail end of a ten-year rally. Going public today would require a full reassessment of their business and would leave many late stage investors and employees with out-of-money stocks.
Grocery distributor Instacart is the only company in that class that has publicly taken its lumps. In March the the company said reduced its valuation by about 40% to $ 24 billion, a move that allows Instacart to tell employees and recruits that upcoming stock awards will be issued at a lower price.
But even that reduction may not fully reflect how much investor sentiment has soured from the tech market that has been the top flyers for so long.
The Renaissance IPO ETF, which tracks around 100 publicly traded companies in recent years, is nearly 60% lower than its 52-week high in September. The index tumbled 9.7% on Monday, bringing the May decline to 19%.