HR software group Justworks pulls IPO as tech stocks tumble

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Justworks, a human resources software company that planned to list in a $260 million initial public offering this week, suspended the IPO in a sign of tensions stemming from the recent sell-off in tech stocks.

The New York-based company was expected to strike a deal Wednesday night to join the Nasdaq that would have valued it at $2 billion. But in a brief statement Wednesday morning, Justworks said it had “decided to delay its IPO due to market conditions at this time.”

The tech-heavy Nasdaq Composite Index has fallen 4% since early January, with newly listed companies particularly hard hit. The Renaissance IPO Index, which tracks companies listed over the past two years, fell nearly 10% this month.

The declines followed what had already been a tough 2021 for IPOs despite robust gains in the broader stock market. Companies raised a record amount of cash through IPOs last year, but many fell out of favor with investors after listing.

Two-thirds of companies that made IPOs in 2021 ended the year below their offering price. The Renaissance index had its worst year against the S&P 500 stock index since its launch in 2009.

Bankers entered 2022 optimistic about the pipeline of new IPO candidates, but warned of problems if recent poor performance continues.

Speaking in late December, Jim Cooney, head of Americas equity capital markets at Bank of America, said: “This is going to be important for the first handful of IPOs that come out of the gate to trade well, because it will have an impact. . . investors are going to be very focused on deal size, valuation and stock composition.

Justworks’ delay follows the decision by Trajector, a benefits software company, to cancel its planned bid last week.

Authentic Brands, owner of brands such as Forever 21 and Sports Illustrated, has also officially withdrawn its listing – two months after taking an investment from a consortium led by CVC Capital Partners.

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