Goldman tests the bubble case behind the IPO boom
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U.S. IPO volumes are set to cross $200 billion this year to set a new record — and while that surge has raised worries about a market bubble, Goldman Sachs characterizes the heightened activity as market normalization. With around 60 U.S. IPOs this year, the activity remains close to its 25-year median of roughly 100 deals per year, far below the nearly 400 listings seen during the 1999 dot-com peak or when over 250 companies went pubic in 2021. "The current reopening looks more like a normalization of IPO activity — amplified by a few very large deals — than the broad-based surge investors typically associate with an IPO boom," Ben Snider, chief U.S. equity strategist at Goldman Sachs, said in the report Wednesday. Owen Lamont, senior vice president and portfolio manager at Acadian Asset Management, however, described a surge in equity issuance as "one of the four horsemen" of a market bubble, adding that companies naturally prefer to sell shares when they believe their equity is overpriced. "IPOs are like bananas: they need to ripen before they're ready to eat," Lamont said, advising investors to remain patient rather than chasing newly listed stocks immediately after trading begins. There are also concerns over whether investors can absorb the new supply, especially as post-IPO lockup periods expire in 2027. Jay Ritter, director of the IPO Initiative at the University of Florida, agrees with Snider and views digestion worries as overblown. He said that U.S. public companies return roughly $1.6 trillion to investors annually through dividends and stock buybacks. That massive pool of cash needs to be recycled back into the market, providing plenty of liquidity to absorb new listings. Europe and Hong Kong European companies have raised over 200 billion euros in equity over the past 12 months, but net equity issuance, after accounting for redemptions and buybacks, remains slightly negative at -0.2% of market capitalization. Peter Oppenheimer, chief global equity strategist, and Guillaume Jaisson, senior global equity strategist at Goldman, said that the region's main challenge isn't corporate oversupply, but a lack of domestic equity inflows. "The key contrast between the U.S. and European IPO landscape revolves not around issuance, but flows," they wrote in the report. As a result, European IPO deal counts remain suppressed at around 40 over the past year, compared to a historical norm of roughly 100. In sharp contrast to Europe, Hong Kong's IPO market staged a robust turnaround last year following a multi-year slowdown, and that momentum has continued this year. After averaging just $10 billion annually between 2022 and 2024, Hong Kong listings raised $37 billion in 2025 and are on track to hit $60 billion in 2026, according to the Goldman report. Total equity supply in Hong Kong, including secondary financing, is projected to reach $110 billion this year. Si Fu, senior China equity strategist at Goldman, attributes the surge to a convergence of policy easing, accommodative Hong Kong Exchange listing rules, and a wave of "A-to-H" dual listings as Chinese firms seek offshore capital channels. Additionally, post-IPO performance in Hong Kong has outperformed historical averages, with listings generating an average return of 60% in their first three months. Goldman expects annual demand worth more than $400 billion, driven by corporate buybacks, Southbound capital flows, and global sovereign wealth funds