- The Nasdaq is on track to raise more money through IPOs than the New York Stock Exchange this year
This year, companies are on track to raise more money through IPOs on Nasdaq than the New York Stock Exchange according to The Wall Street Journal. This is the first time this has happened since Facebook’s IPO in 2012. Total funds raised in Nasdaq-listed IPOs this year have been $32.4 billion compared to $26.2 billion for IPOs at the NYSE — which is based on data from Dealogic.
One of the most recent wins for Nasdaq is the Brazilian brokerage company XP Inc. XP had priced its Class A common shares at $27 last week and now it is trading at about $37. By winning IPOs from companies, the Nasdaq and New York Stock Exchange collect listing fees and increase trading volumes in order to generate more revenue from transaction fees. Winning highly anticipated IPOs also enhances the brands for each exchange and leads to more future listings.
The Nasdaq and NYSE offer different perks to win over businesses. For example, the NYSE offers a bell-ringing event at the company’s building in lower Manhattan. And the Nasdaq places corporate logos at its billboard facing Times Square.
However, the NYSE is the winner of the total capital raised. This metric includes corporate IPOs, follow-on offerings, and closed-end fund listings.
“The New York Stock Exchange remains by far the global leader in capital raised, with over $100 billion in IPOs and follow-on offerings in 2019,” said NYSE vice chairman and chief commercial officer John Tuttle.
Some of the biggest IPOs that the NYSE won in 2019 include the $8.1 billion Uber IPO and the $3.3 billion Avantor IPO. And the Nasdaq won the $2.3 billion Lyft IPO.
Tuttle also pointed out that the NYSE is pioneering direct listings, which enables companies to float shares on an exchange without having to raise new funds. This is a more economical option than traditional IPOs as well. Spotify and Slack both used this method to go public this past year. Nasdaq has not done a direct listing yet, but it is providing it as an option for companies looking to go public in the future.
The NYSE was originally founded in 1792 and is an institution when it comes to blue-chip stocks. And the Nasdaq quickly became associated with tech company IPOs after it was founded in 1971.
But after a glitch with the Facebook IPO happened in May 2012, a number of tech companies became apprehensive about going public on the Nasdaq. During the Facebook IPO, a number of traders were uncertain whether their orders were executed and it affected Facebook’s stock price for several months. Plus the Nasdaq had to pay tens of millions of dollars in settlements.
This setback was one of the biggest reasons why the Nasdaq was unable to with the $25 billion Alibaba IPO in 2015.
After the debacle, the Nasdaq fixed the IPO process so that companies going public would receive more information about what is happening with their stock. And Nasdaq EVP for corporate services Nelson Griggs told The Wall Street Journal that the company had to rebuild tis relationship with banks to convince them it would not happen again.
Clearly, the Nasdaq has made a comeback this year. This past year, the Nasdaq won a number of biotechnology IPOs due to the popular Nasdaq Biotechnology Index — which includes the biotech companies on the exchange. And the biotech companies that go public on the Nasdaq are also included in ETFs that are connected to the index. This way more investors are able to become buyers of the stock and help drive the price up.
Another way that the Nasdaq won listings over is by setting up a new event space on the tenth floor of its building in Midtown Manhattan — which also features a 2,100 square-foot terrace with a view of Times Square.
