Goldman Sachs believes that the stock market will be able to absorb billions of dollars in initial public offerings (IPOs) and subsequent IPOs this year.
In a new episode of the bank’s Exchanges podcast, Goldman’s US chief Ben Snider he says there are three main reasons why this year’s IPO activity will not pour money into the stocks even though they are very worrying for the market.
“It’s surprising, in fact, more than AI (artificial intelligence), more than the environment today, this is the fear that investors have, that the product will flood the market, and I think there are several reasons not to worry.”
The analyst says that although the numbers associated with this year’s IPO activity sound huge, they are normal based on past history and other factors.
“First, as I said before, the number of sales is not unusual, although the size of the dollar issued is very large.” Second, of course, markets grow exponentially over time. The long-term average corresponds to the environment from 2015 to 2019.
The analyst also says that demand for shares in the market remains strong.
“Then the third reason is that corporate demand is still huge. If you look at purchases, they will exceed a trillion dollars this year, which means that even before we think about brokers or hedge funds or mutual funds, corporate demand for shares will exceed the number of corporate shares.”
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