A 2025 IPO market revival is underway. Big banks are poised to ride the wave

The IPO market is showing signs of recovery in June 2025, with companies like Chime, Voyager Technologies, and Circle experiencing successful public debuts, leading to increased investor optimism and potential upside for investment banks like Goldman Sachs and Wells Fargo. Renaissance Capital notes that the number of IPOs in June is on track to outpace May, suggesting pent-up demand; however, geopolitical tensions and potential trade policy shifts from President Trump could introduce volatility and uncertainty, potentially disrupting the positive momentum.

Analysis

The U.S. IPO market is demonstrating a notable resurgence in June 2025, evidenced by strong debuts such as Chime's 37% first-day pop, Voyager Technologies' 82% surge, and Circle's 168% gain. This positive momentum, with eight IPOs already in June on track to surpass May's total of twelve, suggests a thawing of the previously lackluster market, fueled by strong investor demand compelling companies to upsize deals. Renaissance Capital highlights that 89 IPOs have occurred year-to-date in 2025, ahead of the 150 seen in all of 2024, though still significantly below the 397 debuts in 2021. This activity is creating a favorable environment for investment banking divisions, particularly for firms like Goldman Sachs, which benefits from advisory and underwriting fees, and Wells Fargo, which sees investment banking as a key growth area following the lift of its asset cap, allowing diversification from interest-based income. Matt Kennedy of Renaissance Capital observes that investors are experiencing "FOMO" and realizing "real money to be made in the IPO market again," with a "massive backlog of unicorns" potentially ready to list. However, this recovery is fragile; geopolitical tensions, exemplified by Israel's recent attack on Iran, and the potential for abrupt shifts in U.S. trade policy, such as President Trump's past tariffs which delayed IPOs, pose significant risks. The subdued market reaction to JBS's IPO amidst broader market sell-offs underscores this vulnerability. While M&A activity is also reportedly improving, experts like Roger Altman characterize it as a "bit of a pickup" rather than a boom, indicating a cautious optimism across dealmaking.

Key Decisions for Investors

• Investors should consider overweighting investment banking firms like Goldman Sachs and Wells Fargo, which are well-positioned to capitalize on increased IPO and M&A deal flow, given their respective strengths in advisory services and capital markets growth.
• Maintain a vigilant stance on geopolitical developments and U.S. trade policy announcements, as these factors could rapidly introduce volatility and derail the current positive sentiment in the IPO market, as seen with previous tariff impacts.
• While recent IPOs have delivered significant initial returns, approach new listings with thorough due diligence, acknowledging the inherent volatility and the market's recent memory of challenging periods such as early April's downturn.
• Monitor the pipeline of upcoming IPOs, including those in emerging sectors like space and quantum computing, as continued successful debuts could further solidify market confidence and provide new investment opportunities.