IPOs Still Face a High Bar, Despite Upbeat Debuts

Startup CEOs are feeling practically poetic after watching Reddit and Astera Labs trade up following their public debuts in recent days. It feels like “the sun peeking through the clouds after a long period of rain,” one CEO who has been eyeing a public listing texted me. Bankers and venture capitalists, of course, are writing love sonnets to bring on the next class of IPOs.

Tech companies wanting to go public shouldn’t overreact, however. Just because the market is open doesn’t necessarily mean it’s dumb. An IPO can be a naked moment even for companies with a lot of hype—let’s not forget WeWork’s pulled listing of 2019. Investors will still have real debates and tough questions for the next class of IPOs. Is couponing app Ibotta too dependent on a partnership with Walmart to impress investors? Is healthcare data startup Tempus burning too much cash? Did software firm Rubrik’s revenue growth slow down too much? Do any of these companies and others have a real, sustainable business tied to artificial intelligence?