Justworks, a human resources software company that was scheduled to list in an initial $ 260 million initial public offering this week, suspended the wallet in a sign of tension radiating from recent sales in technology stocks.
The New York-based company is expected to complete a deal on Wednesday night to join the Nasdaq that would have valued it at up to $ 2 billion. But in a brief statement Wednesday morning, Justworks said it had “decided to postpone its IPO due to market conditions at this time”.
The Technology-Heavy Nasdaq Composite Index the case 4 percent since early January, with newly listed companies particularly hard hit. The Renaissance IPO index, which tracks companies that have been listed for the past two years, fell nearly 10 percent this month.
The declines followed what was already a difficult 2021 for IPOs, despite strong rises in the broader stock market. Companies raised a record amount of cash through stock exchanges last year, but many lost favor with investors after their listings.
Two-thirds of companies that completed IPOs in 2021 ended the year below their offer price. The Renaissance index has had its worst year compared to the S&P 500 stock index since its launch in 2009.
Bankers entered 2022 optimistic about the pipeline of new IPO candidates, but warned of problems if the recent poor performance continues.
Jim Cooney, head of America’s equity capital markets at Bank of America, spoke at the end of December: “It’s going to be important for the first handful of IPOs to come out at the gate to trade well, because it will have an impact. . . investors will be very focused on transaction size, valuation and share composition. ”
Justworks’ delay follows a decision by Trajector, a benefits software company, to cancel its planned offering last week.
Authentic Brands, the owner of brands such as Forever 21 and Sports Illustrated, also officially withdrew its listing to list – two months after it took an investment from a consortium led by CVC Capital Partners.