One of the biggest stories on Wall Street this week was a much-anticipated IPO. I won’t name names, but chances are you’ve heard about it.
As our chart this week shows, though, it isn’t alone. There has been a noticeable resurgence in net equity issuance this year. According to recent Federal Reserve data, net equity issuance surged to nearly $390 billion in the first quarter, one of the highest readings on record.
The reason is fairly simple. The IPO market is heating up again, and more companies are looking to raise capital. Interestingly, companies want to sell shares to investors rather than buy them back like they did for much of the past two decades.
Does that mean the bull market is over? Not necessarily. Demand for stocks remains strong. But with more shares coming to the market, investors have to absorb that supply one way or another. And if issuance continues to accelerate, it could become a headwind.
Bottom line: For a long time, companies were some of the stock market’s biggest buyers. Now they’re increasingly becoming sellers. That’s something worth paying attention to.
This is intended for informational purposes only and should not be used as the primary basis for an investment decision. Consult an advisor for your personal situation.
Indices mentioned are unmanaged, do not incur fees, and cannot be invested into directly.
Past performance does not guarantee future results.