Tech IPO Darlings Give Up Some Gains

High-performing public debuts this summer from companies like Figma, Circle and Chime Financial helped drive the narrative that the tech IPO market is back in business.

In recent days and weeks, however, shares of many of the most sought-after new market entrants have taken a steep tumble. And while by many metrics valuations still look elevated, the degree has lessened.

The most prominent example is Figma. The design software company went public nearly four weeks ago in one of the year’s biggest IPOs, with shares more than tripling in first-day trading. The stock peaked at over $140 per share a day later, setting a market cap of nearly $70 billion.

Since then, San Francisco-based Figma has headed lower. Shares were selling for around $72 apiece on Monday, down nearly 50% from their peak.

Coreweave, Circle and Chime

In a similar vein, one of the year’s first mega-IPOs, CoreWeave, is also down from heights scaled in June. Yet the cloud-based AI infrastructure company is still well above its PO price.

Circle has also taken a cut. Shares of the New York-based stablecoin issuer zoomed up 168% during its June 5 market debut. The stock roughly tripled again over the next few weeks, hitting a peak market cap over $60 billion.

Since then, the stock has lost close to half its value. It’s not a tragic story arc, given that Circle is still well above its IPO price. But still, it does demonstrate that one can’t expect shares of unprofitable companies to go up forever.

Online banking provider Chime Financial, by contrast, had a more modest debut. Its shares rose a solid but not eye-popping 37% in initial trading following its June IPO. Even so, Chime is still down about a third from that level today.

A pullback, not a crash

These pullbacks don’t look like a reason for alarm yet. For one, the companies are still trading above the levels at which they priced their IPOs, indicating these are share prices insiders consider satisfactory at least.

Additionally, most of the early gains look more like momentum trading, since these companies are new and thus don’t have an earnings track record to justify a big rally.

Looking ahead, it’s unlikely any companies in the IPO pipeline will change course based on a down period after several buoyant up weeks. If it continues and intensifies, however, we may revise that outlook.