Name: 2020 was a historic year for the stock market
Uploaded: 2020-12-01
Duration: 4 min 4 s
Description: NYSE's Stacey Cunningham describes why this year saw so many IPOs - and what could be in store for 2021.

 STACEY CUNNINGHAM: 2021 is shaping up to be an exciting year, but we just need to take a step back and think about what 2020 was. It was a historic year when it comes to IPOs. We had the busiest year we've ever had in the history of the New York Stock Exchange both September, and then we broke that record in October. So we're coming off a really busy year, which is surprising when you think about it, because the market's been pretty volatile throughout the year. And obviously, when you see market volatility, very often, that's a time when companies choose not to go public because they want a more stable environment when they come out to the market. So typically, there's an inverse correlation between market volatility and the IPO activity. 2020 has broken that mold, just like it's broken so many other molds for us this year. And we've actually seen record-breaking IPO activity, not just IPOs, but also through follow-on offerings as companies are using the public markets to raise money to fight off the challenges of COVID-19 that they've been facing. So 2021 has a pretty high bar to beat. But it's looking busy so far. LUCINDA SHEN: Right. And to your point, volatility has been insane this year. You know very, very well, especially around election years, not even just including a pandemic, but there's a lot of uncertainty that comes with a US presidential election. And we have had one heck of one this year. It's been unprecedented in its own way. It's been long. It's been protracted. And so typically, we see IPOs slow down around that time. But we've seen almost a buildup of even larger IPOs coming out. And so what's been happening there? Do companies-- do these large private companies just not care about the presidential elections anymore? STACEY CUNNINGHAM: They're reacting to market conditions. And if you think about how companies-- the profile of companies has changed, before they go public, it's really evolved pretty dramatically. They're much larger now before they're going public. So companies were staying private for a much longer period of time, and they had access to private capital. What we saw in March when the market volatility really picked up, and the pandemic effect started to unravel, is companies realized that it was much more expensive suddenly to raise money in the private markets. And those public companies were very easily and efficiently raising money in the public markets. So really, the value of the public markets was on display. I think that left a lot of companies asking themselves the question, would they always have the same access to capital in the private markets? And so some of them started to dip their toe into going public sooner. I started having conversations with CEOs that were saying, we're not sure when we want to go. But we know we want to be ready to go, because there was a little bit of a concern that they might not have the same flexibility they always thought they would have. And I think very quickly, you started to realize people were concerned they might be taking the public markets for granted and their access. And so you started to see a lot of companies getting ready to go public. Most of them thought they would avoid the election time period. But if you look historically, the election really has had pretty minimal impact on the actual companies going public and their performance. Markets don't like uncertainty, but as soon as they have a sense of who wins, they react to whatever political landscape there is. And that's not really unusual. It's just that uncertainty right around the election. So I would advise people to avoid that first week in November. This year, it turned out to be a little bit longer as we were figuring out what the election results were. But as that became clear, people are coming back off the sidelines, ready to go public, not just in the month of December, but in early 2021, it picks up again. So I think the election had a pretty minimal impact. The market is reacting to the vaccine news and largely everything else that we're digesting. And you're seeing a lot of market moves up and down, which also is something that's an interesting dynamic when companies are asking themselves how they might go public, because it's not just the IPO. And the IPO tends to be a little more dependent on market conditions than things like SPACs or direct listings, where there isn't a capital raise happening at the same time. And so it's less important what the actual market is doing that day. 

NYSE's Stacey Cunningham describes why this year saw so many IPOs - and what could be in store for 2021.