Davis Polk partner Nicole Brookshire was quoted in the Financial Times on the current state of the tech IPO market. Nicole explained that factors such as weak earnings reports could have an impact on the prospects for new tech issuers. “Guidance has worsened with some companies and sectors [and] many companies are feeling the effects of macro headwinds and that influences valuations,” she added.

Nicole noted that although many tech companies have cut costs and are showing progress toward profitability, it will take time to show that these changes are working. “Last year there was little discussion of profitability [among IPO candidates]. Now there is more, but the problem with switching focus from a growth story to a profit story is it takes time for issuers to be able to prove their progress,” she said.

Market downturn sparks longest US tech IPO drought in over 20 years,” Financial Times (September 18, 2022) (subscription required)