Connect with us

Published

on

Shopper using Instacart

Source: Instacart

As tech startups test the IPO market again, they are pushing up their valuations.

After last week’s successful market debut of chip company Arm, two of the most eagerly anticipated IPOs of former high-flying startups have upped their initial public offering valuations — online grocery firm Instacart and marketing automation company Klaviyo.

But don’t be fooled. In upping IPO ranges, tech stocks are still coming out humbled by the post-2021 IPO market slump. The slate of recent and planned tech initial public offerings will test the market’s appetite for new stocks, and experts say the overall IPO resurgence could be slow — and not without bumps.

Instacart and Klaviyo are both expected to make their debuts on the public market as soon as this week. Arm’s jump of nearly 25% during its first trading day Thursday marked the end of a quiet two years for tech IPOs. But these companies are coming to market in a much different environment than those that went public during the IPO, SPAC and meme stock frenzies of 2020 and 2021. Since then, companies have been contending with record-high inflation, interest rate hikes, concerns for the banking sector, and volatile markets.

The majority (70%) of 73 IPOs year-to-date were trading below their IPO price at the time of Arm’s deal, but most are smaller cap companies, and about half are based outside the U.S.

“We see this as a major turning point,” Matt Kennedy, senior IPO market strategist for Renaissance Capital, said of the first major tech IPOs of the year. “This has been the slowest IPO market in over a decade and we seem to be finally coming out of that.” 

Investors are struggling to assess what companies are worth and are waiting for the IPO market to pick back up, said Ray Wang, principal analyst and founder at Silicon Valley-based Constellation Research.

“It’s a valuation game and what we’re all trying to figure out right now is, what are they really worth?” Wang said. Growth expectations are down, the availability of funding for these types of investments is down, and many investors are still sitting on the sidelines, he added.

Tech IPOs: There won't be 'one set success rate' in the coming quarter, analyst says

Debuting in an uncertain market means companies and investors have had to say goodbye to the soaring valuations they saw when the IPO market was buzzing two years ago. But Instacart raised its valuation target on Friday to up to $10 billion from as much as $9.3 billion after Arm’s successful market debut. That is still a steep decline from the grocery company’s $39 billion valuation in 2021, and a 75% hit to be absorbed by venture capital investors. Klaviyo is targeting a valuation of up to $9 billion on a fully diluted basis, just slightly below its $9.5 billion valuation in 2021

The rising cost of raising capital as a result of the Federal Reserve’s interest rate hikes has weighed on future cash flows of companies and their overall valuations. The state of the global economy and the standstill in the IPO market since 2021 has also put a damper on valuations, Wang said.

The market product Instacart is selling

The good news: valuations look “a lot more reasonable,” Kennedy said, compared to two years ago when investors were basically willing to pay anything. He said investors are more focused on profitability than they were in 2021 and companies are recognizing that. Broadly, the tech pipeline has spent the last two years attempting to improve profitability in order to come to market while maintaining their growth and trying to pitch a reasonable valuation, he added.

Instacart is a prime example of this approach to a successful IPO, looking more like a value stock today than a high-flying, money losing tech startup.

Instacart planning to go public now means it thinks it can make 'real money': Cleo's Sarah Kunst

“They really need to show that they have a strong fundamental base,” Kennedy said.

Instacart and Klaviyo have solid growth similar to what investors saw two years ago, and importantly, now these companies are not hemorrhaging cash, he added.

Instacart and Klaviyo’s lower valuations could be indicative of the outlook for other venture capital-backed companies and tech IPOs going forward — even those that are profitable, said Kyle Stanford, lead VC analyst at PitchBook. “There’s going to be a struggle for a lot of tech companies and VC-backed companies to come to the public markets and get a positive valuation jump from the get-go,” he said.

He doesn’t expect these highly anticipated public debuts to translate into an immediate broader resurgence of tech IPOs. The opportunity for tech debuts will likely be slower over the rest of the year than many people want to see, Kennedy said, though it can slowly gain momentum with a more typical IPO market possible by early 2024.

What to know before investing in IPO stocks  

IPOs can have very volatile trading in the first weeks or even months after a listing. That may be especially true for some of the current deals since they’re the first major tech IPOs of the year and have a relatively lower proportion of shares being sold relative to market cap than historical averages, Kennedy said.

Arm’s stock price was down roughly 5% on Monday morning after its Friday first-day pop.

“My advice would be don’t feel like you need to chase the crowd,” Kennedy said. “And if you do, at least be aware that that’s what you’re doing and have an exit strategy in mind.”

There tends to be an initial excitement with IPOs during which the price gets bid up before losing momentum. Often it’s better to wait until after the first major pullback, Kennedy said.

While these tech IPOs are growth companies, their recent profitability doesn’t guarantee that they’ll be profitable in the long term. And according to Stanford, if the market doesn’t shift back to putting a premium on growth, they’re going to have a difficult time in the public market.

“These companies are risky, especially in a market where your two-year bond is paying almost 5%,” Stanford said. “It’s still an uncertain market and if inflation were to rise back up or interest rates continue to go back up, these riskier tech stocks are going to take a hit.”

Companies will need to show continued growth, profitability and a decent valuation before we see the IPO market back in full swing, Kennedy said.

Continue Reading

Technology

Stablecoin issuer Circle applies for a national bank charter

Published

on

By

Stablecoin issuer Circle applies for a national bank charter

Traders work on the floor at the New York Stock Exchange (NYSE), on the day of Circle Internet Group’s IPO, in New York City, U.S., June 5, 2025.

Brendan McDermid | Reuters

Stablecoin issuer Circle Internet Group has applied for a national trust bank charter, moving forward on its mission to bring stablecoins into the traditional financial world after the firm’s big market debut this month, CNBC confirmed.

Shares rose 1% after hours.

If the Office of the Comptroller of the Currency grants the bank charter, Circle will establish the First National Digital Currency Bank, N.A. Under the charter, Circle, which issues the USDC stablecoin, will also be able to offer custody services in the future to institutional clients for assets, which could include representations of stocks and bonds on a blockchain network.

Reuters first reported on Circle’s bank charter application.

There are no plans to change the management of Circle’s USDC reserves, which are currently held with other major banks.

Anchorage Digital is the only other crypto company to obtain such a license.

Circle’s move comes after a wildly successful IPO and debut trading month on the public markets. Shares of the company are up 484% in June. The company is also benefiting from a wave of optimism after the Senate’s passage of the GENIUS Act, which would give the U.S. a regulatory framework for stablecoins.

Having a federally regulated trust charter would also help Circle meet requirements under the GENIUS Act.

“Establishing a national digital currency trust bank of this kind marks a significant milestone in our goal to build an internet financial system that is transparent, efficient and accessible,” Circle CEO Jeremy Allaire said in a statement shared with CNBC. “By applying for a national trust charter, Circle is taking proactive steps to further strengthen our USDC infrastructure.”

“Further, we will align with emerging U.S. regulation for the issuance and operation of dollar-denominated payment stablecoins, which we believe can enhance the reach and resilience of the U.S. dollar, and support the development of crucial, market neutral infrastructure for the world’s leading institutions to build on,” he said.

Don’t miss these cryptocurrency insights from CNBC Pro:

Continue Reading

Technology

Meta shares hit all-time high as Mark Zuckerberg goes on AI hiring blitz

Published

on

By

Meta shares hit all-time high as Mark Zuckerberg goes on AI hiring blitz

Mark Zuckerberg, chief executive officer of Meta Platforms Inc., during the Meta Connect event on Wednesday, Sept. 25, 2024.

Bloomberg | Bloomberg | Getty Images


Meta shares hit a record high on Monday, underscoring investor interest in the company’s new AI superintelligence group.

The company’s shares reached $747.90 during midday trading, topping Meta’s previous stock market record in February when it began laying off the 5% of its workforce that it deemed “low performers.”

Meta joins Microsoft and Nvidia among tech megacaps that have reached new highs of late, all closing at records Monday. Apple, Amazon, Alphabet and Tesla remain below their all-time highs reached late last year or early this year.

Meta CEO Mark Zuckerberg has been on an AI hiring blitz amid fierce competition with rivals such as OpenAI and Google parent Alphabet. Earlier in June, Meta said it would hire Scale AI CEO Alexandr Wang and some of his colleagues as part of a $14.3 billion investment into the executive’s data labeling and annotation startup.

The social media company also hired Nat Friedman and his business partner, Daniel Gross, the chief of Safe Superintelligence, an AI startup with a valuation of $32 billion, CNBC reported on June 19. Meta’s attempts to buy Safe Superintelligence were rebuffed by the startup’s founder and AI expert Ilya Sutskever, the report noted.

Wang and Friedman are the leaders of Meta’s new Superintelligence Labs, tasked with overseeing the company’s artificial intelligence foundation models, projects and research, a person familiar with the matter told CNBC. The term superintelligence refers to technology that exceeds human capability.

Bloomberg News first reported about the new superintelligence unit.

Meta has also snatched AI researchers from OpenAI. Sam Altman, OpenAI’s CEO, said during a podcast that Meta was offering signing bonuses as high as $100 million.

Andrew Bosworth, Meta’s technology chief, spoke about the social media company’s AI hiring spree during a June 20 interview with CNBC’s “Closing Bell Overtime,” saying that the talent market is “really incredible and kind of unprecedented in my 20-year career as a technology executive.”

WATCH: Meta’s AI talent spending spree

Meta escalated talent war with OpenAI

Continue Reading

Technology

Joby Aviation stock pops 12% after delivering first flying taxi to UAE

Published

on

By

Joby Aviation stock pops 12% after delivering first flying taxi to UAE

An electric air taxi by Joby Aviation flies near the Downtown Manhattan Heliport in Manhattan, New York City, U.S., November 12, 2023. 

Roselle Chen | Reuters

Joby Aviation stock soared about 12% as the flying air taxi maker got closer to launching a service in the United Arab Emirates.

The electric vertical takeoff and landing, or eVTOL, company said Monday that it delivered its first aircraft to the UAE and has completed piloted flight tests as it readies for a 2026 launch in the region.

“Our flights and operational footprint in Dubai are a monumental step toward weaving air taxi services into the fabric of daily life worldwide,” said founder and CEO JoeBen Bevirt in a release. He called the Middle East nation a “launchpad for a global revolution in how we move.”

Joby’s planned launch in the UAE was announced in February 2024 as part of an agreement with Dubai’s Road and Transport Authority. The deal included exclusive rights to conduct air taxi service in Dubai for six years.

Read more CNBC tech news

As part of the project, Joby said in November that it began building one vertiport at Dubai International Airport, with three additional locations slated for Palm Jumeirah and Dubai’s downtown and marina. Joby also announced an air taxi agreement with three Abu Dhabi government departments in 2024.

The California-based company has made other expansion moves in the Middle East. Shares jumped earlier this month after Saudi Arabian firm Abdul Latif Jameel announced a roughly $1 billion investment for up to 300 eVTOLs. The firm participated in Joby’s Series C funding round.

Joby shares have surged more than 32% this year, swelling its market capitalization to over $9 billion.

Demand for air taxis, which take off and land similar to helicopters, has gained momentum in recent years. The service faces regulatory and safety hurdles but has been lauded for its ability to cut traffic congestion and slash emissions.

Earlier this month, President Donald Trump signed an executive order that included a pilot program for testing electric air taxis.

WATCH: Joby Aviation shares pop on Saudi Investment

Joby Aviation shares pop on Saudi Investment

Continue Reading

Trending