Despite a strong start to the year, the cadence of new issues has faltered in recent weeks.
It’s not entirely unexpected given the dysfunction in Washington, negative investor sentiment, and challenges being presented by the broad market.
It’s unfortunate for investors, especially those of us who monitor the IPO market when looking for potential winners.
New issues increase the supply of names to consider buying. And a strong IPO market frequently translates to increased M&A activity and spin-outs, which provide additional opportunities for nimble investors.
Put simply, a healthy IPO market creates opportunities. And after a strong start to 2025, the IPO market is drying up.
Year to date (YTD) there have been 41 IPOs priced. That’s a 78% increase over last year at this time.
Of those 41, 17 came public in January (vs. 11 last Jan.), 18 came public in February (vs. 10 last Feb.), and six have come public in March (vs. 9 in all of March last year).
While that might look like significant activity, total proceeds are only up by 18% to $6.9 billion YTD.
Given that the number of IPOs is up 78% but proceeds are up only 18%, that tells us that deal size has been relatively small.
Venture Global (VG), at $1.75 billion raised, is the biggest IPO YTD.
Interestingly, the number of SPAC IPOs has hit a four-year high. 17 blank-check companies have priced, significantly more than the six that priced in the first quarter of 2024.
The performance of SPACs isn’t that inspiring, however. According to Renaissance Capital, only about 15% of companies that completed a merger through the SPAC process over the past five years trade above the $10 offer price.
The SPAC market continues to be dominated by tech, quantum, crypto, space, satellite, nuclear and alternative energy-type names. Exciting for sure, but the data shows it’s best to be pretty cautious when wading into the SPAC pool.
Two 2025 IPOs to Consider
It’s very rare that I’ll jump into an IPO that hasn’t been trading for at least a few months. I’ll typically put the ones that seem interesting on a watch list and keep tabs on them until the lockup expiration date has passed, then consider taking a stake.
Given that, the following two companies are definitely not recommendations. They are simply two of the larger (a relative term) IPOs so far this year that have businesses that I find interesting and will be keeping an eye on.
You may want to do the same.
Karman Space & Defense (KRMN)
Karman (KRMN) is an aerospace company that engineers and manufacturers integrated payload protection, propulsion and interstage system solutions for a number of aerospace and defense prime contractors.
The business is focused on three markets: hypersonic and strategic missile defense, missile and integrated defense systems and space and launch.
A few specific components that Karman makes are heat shields, rocket bodies, launcher systems and solid rocket motors.
No program has made up more than 10% of the company’s trailing nine-month revenue, which was $254 million (+24.7%) and generated GAAP net income of $11 million.
The company currently has a market cap of $4.5 billion and just came public on February 13 at 22. Shares have traded as high as 35.8, although they’ve backed off that level since but are still up about 57% from the IPO price.
I think this is one worth watching given the rising interest in space development.
Metsera (MTSR)
Metsera (MTSR) is a pre-revenue biotech company advancing injectable and oral treatments to treat obesity.
The company’s most advanced asset, MET-097, is an injectable GLP-1 that’s in a Phase 2b trial with a 28-week data readout coming in the middle of this year. One of the reported benefits of this drug candidate is that dosing in the initial phase is consistent, and then it’s once monthly.
The company will also have multiple Phase 1 trial readouts mid-year, including MET-233 (another GLP-1) and a combined MET-097 and MET-233 trial. The oral candidates are a little further behind the development curve.
Metsera has around $640 million in cash, which management says will last until Phase 3 trials are slated to begin in 2026.
Like most early-stage biotech stocks, MTSR is likely to offer a wild ride, rising and/or falling on trial data, then drifting around in between.
For those interested in the science, I suggest reading up on it, then being super patient with purchases and looking to buy on the inevitable drawdowns.
