Nasdaq CEO Adena Friedman Says Smaller IPO Market Needs to be Fixed

Last week, Nasdaq CEO Adena Friedman sat down with CNBC to discuss the initial public offering market. Recently, multiple high profile issuers have completed an IPO or have indicated their intent to do so in the not so distant future.

On the day Friedman was discussing her exchange, Zoom’s (Nasdaq:ZM) IPO rocketed on Nasdaq zooming well over its IPO price of $36/share, topping out at $66 dollars. Pinterest (NYSE:PINS), another IPO, hurdled its initial price but not quite as dramatically.

On the other side of the fence, Lyft (Nasdaq:LYFT) sunk, plunging from its IPO price of $72/share.

Asked what happened with Lyft, Friedman said they have a “long road” ahead of them. “I believe it is really important to look at them over the long term and not just the last few weeks,” explained Friedman.

The mixed bag of IPOs that either left money on the table or, perhaps, took too much, highlights the challenge in pricing a public offering.

Asked how healthy the IPO market stands today? Friedman said the market has been “healthy for awhile.” She said there were 182 IPOs last year and 50+ so far in 2019. “There is a lot of pent up demand … still.”

So does regulation bog down the IPO market? Friedman had this to say:

“I actually still think there are still some impediments to companies wanting to tap the public markets earlier in their lifecycle. The companies we see coming out now are multi-billion dollar companies who waited many, many years to go public,” said Friedman. “What we would love to see is companies wanting to tap the public markets earlier in their life their life cycle to give more of the average investors access to their growth as they are younger companies … Not waiting until they become these great, $10 billion companies to go tap the public markets.”

What we would love to see is companies wanting to tap the public markets earlier in their life their life cycle to give more of the average investors access to their growth as they are younger companies… Click to Tweet

Friedman said they continue to see these impediments to smaller firms raising capital publicly instead of privately, alluding to the challenging regulatory environment and cost affiliated with becoming a reporting firm.

The private markets, specifically Regulation D, is a trillion dollar market – annually. Reg D dwarfs public offerings. The deep pools of private capital seeking growth opportunities before retail types jump aboard has generated a certain amount of grumbling amongst the sophisticated masses. Friedman is correct in stating “impediments” exist for smaller firms.

Earlier in the month at an event in Toronto, the CEO of the Canadian Stock Exchange, Richard Carleton, hit a nerve when he called IPOs in the US a liquidity event for rich peoplemore of an exit than an entry point.

So will US policymakers, both elected and appointed, do something to address this shortcoming where access is given to the well off while the hoi polloi watches from the bleachers? Don’t hold your breath.


Demand is still steady in IPO market, says Nasdaq CEO Adena Friedman from CNBC.

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