The collapse of Amazon The proposed deal to buy iRobot highlights how critical the IPO market is this year. Now that governments are tightening the screws on big tech companies trying to buy smaller companies, a key exit route could be closed to startups in the short term.
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If mergers and acquisitions are more difficult to pull off, especially for large tech companies that sometimes prefer to buy new technology rather than build it, unicorns and other late-stage startups will have very few avenues available to them for liquidity other than by exiting. to bag. That fact makes Reddit feel its own IPO valuation even more important. What could help tech companies avoid another 2023 (a year in which there were very few public debuts) is a massive, winning public offering.
To achieve this, Reddit must price its offering very carefully. Price too low and any positive business results that follow could be considered more artificial than material. Too high and the stock could lose ground from its IPO price.
Image credits: Nigel Sussman (Opens in a new window)
But private tech companies want good IPO news that sticks, and public market investors won't gain confidence if Reddit clears a bar it set too low. However, if the price is too high, Reddit's performance after the IPO may scare companies if they can't keep up. Last year we saw how much post-IPO business performance can impact other companies' decisions to go public: When Instacart failed to retain profits after pricing at $30 per share, other tech companies took note. Today, Instacart is worth just over $25 per share.
