“I honestly thought last year would be the busiest in a couple of decades,” Aloke Gupte, JPMorgan’s co-head of equity capital markets for Europe, the Middle East and Africa, told me. “This year has topped that by a distance.”
What’s happening: In the third quarter, which wraps up Thursday, 94 US initial public offerings, or IPOs, raised $27 billion. That makes it the best July-to-September period by deal count since 2000, according to a report from investment bank Renaissance Capital.
Globally, 2,044 new listings have brought in roughly $468 billion year-to-date, per Dealogic data compiled for CNN Business. That’s already surpassed a record-setting 2020, when 1,656 deals raised almost $358 billion.
The third quarter includes the typically slower summer period, when trading volume eases and bankers take vacations. Activity did taper off in August, but the overall calendar has been extremely full.
Healthcare and tech were the most active sectors, generating two-thirds of the quarter’s US IPOs, Renaissance Capital said. It also noted an uptick in consumer companies going public, including drive-thru coffee chain Dutch Bros., Swiss shoe brand On and grill-maker Weber.
Gupte pointed to a number of factors driving the recent boom, including the economic recovery, which has lifted stocks, and strong valuations across sectors.
This helps, too: Companies tapping public markets have seen shares perform well in early trading, with many enjoying huge day-one pops — an important marker both for the firms making their debuts and the banks who help price shares.
Why it matters: Gupte said that the success of recent IPOs is encouraging companies to go public earlier in their lifetime — a meaningful shift from recent years, when many startups have opted to stay private longer.
“Every single time the market’s fallen back, it’s come back and [reached] a new high,” Gupte said. “A very, very high class of companies are lining up to go public.”
Dollar Tree will sell more stuff for above $1. Investors love it
The company has announced that it will begin selling items for $1.25 and $1.50 at some locations for the first time, my CNN Business colleague Nathaniel Meyersohn reports. It will also add $3 and $5 items to more stores, expanding on a recent strategy to move away from only offering goods for $1.
Investors were thrilled with the news. (No surprise there: The new approach to pricing will ostensibly encourage customers to spend more per trip.) Shares surged 16.5% on Wednesday.
Time machine: Dollar Tree has faced pressure from Wall Street in recent years to boost prices. In 2019, an activist investor took a stake in the company and pressed the chain to take action. The group ended its fight after Dollar Tree announced plans to test different pricing options.
Yet the move is also a response to worrisome trends. CEO Michael Witynski told the Wall Street Journal that the addition of items above $1 was in part a reaction to rising costs. In August, the company slashed its profit forecast for the year, citing the impact of higher shipping expenses.
“We recognize the need to make adjustments in the current economic environment,” Witynski said. The company needs to factor in “the pressure all of us are seeing on wages, freight and on our suppliers and cost increases,” he continued.
Watch this space: Hiking prices does carry the risk of turning off shoppers — especially for chains that target those on tighter budgets.
“Dollar Tree should benefit from changes in its pricing strategy, although we worry about the customer reaction, given their high sensitivity to prices,” Telsey Advisory Group’s Joseph Feldman said in a note Wednesday.
Inflation is a nightmare. Especially when it hits bacon
Post-lockdown inflation is worrying policymakers around the world, who fear that prices could spiral out of control if supply chains remain clogged and workers start demanding higher pay.
The price of the much-loved breakfast food is more expensive for Americans than it has been in 40 years, my CNN Business colleague Alicia Wallace reports. The average price for a slab of bacon has jumped nearly 28% during the past 12 months, according to government data.
Step back: The domestic pork supply chain was one of quickest to get knocked out of whack when Covid-19 hit. Facilities shut down, and the backlog of animals grew. Millions of pigs were euthanized without being processing into food.
Pork production is expected to close out the year 2% lower than 2020 levels, IHS Markit economist Adam Speck told Alicia. Demand, meanwhile, has been “exceptional.”
Experts don’t expect these problems to be resolved soon. They’re also worried about the reemergence of African Swine Fever, which cropped up in the Dominican Republic over the summer.
The Biden administration is taking action. Its team of economists has said prices are high because a handful of large companies control the majority of market share, and outlined plans to level the playing field earlier this month.
Will greater enforcement of antitrust laws, investigations into price fixing and support for new market entrants solve the problem? Hungry Americans, at least, should stay tuned.
Also today: Fed Chair Jerome Powell and Treasury Secretary Janet Yellen testify on the pandemic response before the House Financial Services Committee starting at 10 a.m. ET.
Don’t miss this: Today at 12 p.m. ET, CNN Business presents “Foreseeable Future: Cryptomania.”
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