IPO market nears peak as valuations hit 20-year high

Low interest rates and hefty returns have driven record demand for IPOs, but with valuations for newly public companies now at levels last seen during the dot-com bubble, some analysts are raising concerns that the boom may be nearing an end.

In 2020, companies raised $61.9 billion, the most since 2000, according to a measure by Jay Ritter, a finance professor at the University of Florida. This demand has driven valuations to levels not seen since the dot-com bubble two decades ago. In 2020, investors valued IPOs at a median of 38 times the company's revenue, close to the nearly 41x valuation seen in 2000, according to Ritter. Those valuations have begun to drop in 2021, but remain historically high.