In a previous update in mid-January, NASDAQ’s IPO pulse in the US and Stockholm showed that initial public offering (IPO) activities are likely to continue to rise until mid-year.
If the economic status quo was held (mainly) then it may have been the case if the rise in IPO activity had been held by the first quarter, but there have been a lot of changes since January and the end of the first quarter.
The outlook for the IPO is clearly weakening, and this has begun in front Historic tariffs were announced on April 2nd. The severe sale in April added to a major slowdown in the US and Stockholm IPO pulses. In fact, we’ve already seen multiple Companies postpone IPO Recently.
NASDAQ IPO pulse signals are likely to soften US IPO activities
Consistent with the January analysis, IPO activity continued to move upward in the first quarter of 2025, looking at 58 non-SPAC IPOs (charts below, greenbars).
However, it is possible that slowing down is taking shape.
After hovering about 34 years in December, the NASDAQ IPO pulse declined this year, falling to its 16-month low (blue line) in March.
Chart 1: NASDAQ IPO Pulse drops to its 16-month low in March before mutual tariff sales
To determine whether this recent decline indicates a slump in IPO activity, we compared it with the true recession of IPO activity and the past recession of IPO pulse, a false alarm. This comparison reflects the way the National Bureau of Economic Research uses to date US recessions. Depth, diffusion, duration of a recession across components.
Unfortunately, during the first months of the recession, a real recession and a false alarm are essentially indistinguishable. So, while it cannot be clearly stated that a recession is guaranteed until March, if the market sales deepen in April, it is highly likely that a pure recession will take hold soon in the second quarter.
Stockholm IPO pulses indicate that cooling IPO activity is likely ahead
In Stockholm, the situation is similar. Q1 IPO activity remains on the upward trend in Stockholm, with eight IPOs (charts below, green bars). This is the second and second in the quarter in nearly three years and only the 10 IPOs for the 10th quarter of 2024.
But again, the IPO pulse shows that this rise is unlikely to continue.
After holding it just below the summer of 2024 and just below until January, the Nasdaq Stockholm IPO Pulse fell to its 14-month low in March (blue line).
Chart 2: Nasdaq Stockholm IPO Pulse at 14 Month Low in March
When comparing it to past recessions where real recessions are expected with the activity of the Stockholm IPO and false alarms, this recession was approaching a true recession in March, based on the depth and spread of the overall ingredient. However, they track false alarms in terms of duration, and all three elements (depth, diffusion, and duration) must be placed to develop a pure recession.
It would have been premature to declare that Stockholm’s IPO recession would be ahead of March, like in the US, but the global sale in April makes a recession highly likely.
Increased uncertainty and mutual tariffs on stock weights
Until March, the main reason for the dim outlook for the IPO pulse was an increase in uncertainty. This is the risk highlighted in the 2025 outlook in December.
That increased uncertainty was driven by a rapid shift in US trade policies, pushing US uncertainty to record highs in March (chart below, red line). Swedish uncertainty (blue line) remained centered around its historic average, while US uncertainty was flowing into international markets.
Chart 3: Uncertainty is record high in the US, but average in Sweden
However, since mutual tariffs announced on April 2, a corresponding global sale will further dimble the outlook.
Regarding returns, both MSCI Sweden (chart below, blue line) and MSCI USA (red line) peaked in mid-February, each falling into a correction.
Chart 4: US uncertainty and trade policy to contribute to the US and Sweden revision
As a component of both IPO pulses, the market is important as it can be filtered to other components such as valuation, volatility, and sentiment. This stepdown in market returns in April could push the IPO pulse into a deeper recession.
The decline of IPO activities in the US and Stockholm is ahead
In the coming months, IPO activities could be slower in the US and Stockholm as historical changes in trade policy increase headwinds.
The severity of these recessions will be more clear in the next update in July.
